Decentralized finance is becoming more things to more people. That’s not easy to do.
Life is getting harder for developers of decentralized finance (DeFi) protocols. Emerging use cases that appeal directly to consumers are offset by inconsistent regulation and cutthroat competition, the Solana Foundation concluded in a newly released report.
Solana’s overview presents a detailed but concise history of DeFi’s evolution. It traced the growth of blockchains from simple digital currency exchanges to complex ecosystems that provide opportunities for lending, borrowing, yield generation and more, thus creating a DeFi consumer market. The introduction of stablecoins was a turning point. “It is no exaggeration to say that stablecoins have turned out to be one of the main ‘killer applications’ of crypto so far,” the report stated.
The report considers the barriers to DeFi expansion along with its increasing use. It mentions unstable demand, unsustainable incentive structures, ineffective governance models and security risks among them. The role of the hostile US regulatory environment is also examined.
