‘Massive’ growth of DeFi in 2020: Adoption — the driving force

100x Growth in TVL, just 1.1 million users

The year 2020 alone witnessed the value of DeFi growing 14 times. From $690.9 million on the 1st of January, 2020 to approximately $15 billion in January 2021 and close to $75 billion at the time of writing, the growth is unparalleled. As we approach the end of the first half of the year, the total value locked(TVL) has already increased 5 times since January.

This exponential growth of DeFi since the beginning of 2020 is no less than a surprise. With the advent of DAOs (decentralized autonomous organizations), Flash Loans, advanced liquidity pools, and (AMMs)automated market makers, the landscape of financial services has evolved with decentralization.

Apart from the TVL, the growth of DeFi in 2020 can be realized through various aspects. For instance, the supply of stable coins added $20 billion in the year, reaching $26 billion. Another indicator is the institutions participating in the ecosystem.

Most importantly, the growing use cases of DeFi become a clear indicator of its growing prominence in the financial world. These include financial derivatives, credit and debit cards, fractional ownership of assets, liquefying in-game assets, governance tokens, and much more.

Therefore, the factor that drives the industry to grow at this pace is that it has introduced a better, advanced, transparent, and unbiased financial ecosystem. The return on investment possible in DeFi exceeds the traditional investment options by a significant number due to lack of intermediaries.

However, the current growth may seem impressive but it does not even come close to its true potential and this is quite evident from the fact that out of the 69% of the world’s population that is banked, DeFi is currently being used by just 1.1 million users.

So what holds back the growth?

Lack of awareness and knowledge used to be the primary reason holding back the growth of the Crypto ecosystem as a whole but as we move past those, new challenges have surfaced.

1. Low Utilization rate and Lack of utility

There are limited buyers in the market. The reason why lenders have to jump from one protocol to another in order to get the best APY is that the supply has been exceeding the demand. DeFi has, until now, been focusing on the lenders, providing them lucrative APY. A low utilization rate is the result of a lack of borrowers on these platforms.

2. Complexities of the Platforms

For the traditional users, DeFi applications can be a little intimidating considering the number of concepts they have to understand, the lack of an easy-to-use interface, and the absence of direct real-life applications.

3. Skyrocketing gas fees on the Ethereum network

Considering the prominence of Ethereum in the current DeFi space, the network congestion on Ethereum leads to higher transaction fees or gas fees. This is one of the biggest bottlenecks for small ticket size lenders and borrowers.

Even if the aforementioned challenges are resolved, the person investing or providing liquidity to the DeFi protocols needs to shift between multiple protocols efficiently. Even one small delay in shifting funds from a low APY pool to a high APY pool can affect the returns drastically.

Mass DeFi to the rescue

MassDeFi is a yield-optimizer platform built on the top of the Binance Smart Chain that addresses each of the existing as well as potential challenges that hinders the adoption of Defi.

The integration of DeFi with the current financial system is the most critical barrier for DeFi’s true growth. Features such as crypto credit cards, 0% consumer loans, liquidity aggregation, insured collaterals, and many more allow MassDeFi to complement the traditional financial sector and bring more inclusivity.

Technical or non-technical, MassDeFi’s intuitive interface caters to all. The advanced user interface of MassDeFi is also available as a mobile application for both android and IOS.

Furthermore, MassDeFi addresses the most critical challenge in DeFi to ensure that there is adequate demand. This is reached through a sustainable use case such as enabling a user to buy a product such as sunglasses from the brick and mortar store using MassDeFi’s credit card. For crypto users, they can receive a loan directly in their bank accounts by putting their cryptocurrency holdings as collateral.

Therefore, accommodating key real-life use cases, MassDeFi gives a sense of belongingness to the DeFi world in our everyday lives.

At the current monthly growth rate, TVL in the DeFi protocols will cross $400 bn by the end of 2021. However, another perspective tells us that, until now DeFi was available for tech-enabled traders and investors. But mainstream adoption isn’t a far-fetched dream anymore. MassDeFi has become a significant part of this wave by providing a one-of-a-kind solution with its multi-chain support, gasless transactions, and integration with the traditional system to provide real-life usage.