The financial sector is inching closer to accepting Decentralized Finance (DeFi), offering to solve most issues present with centralized systems.
DeFi is disruptive by nature - it eliminates intermediaries, breaking down barriers associated with traditional finance and making it more cost-effective and accessible to everyone. In fact, the DeFi market will grow from $23 billion in 2023 to a whopping $48 billion by 2031.
The next few years will likely prove to be pivotal in terms of mainstream adoption and further progress of this bustling new industry - which is exactly why all participants should be familiar with the latest blockchain trends that are popping up.
Why 2024-2025 are crucial for DeFi
DeFI 2024 is truly a sight to behold. The transition from what was once speculative trading to real-world utilization is an indication that the market is maturing and moving towards creating demonstrative value.
Apart from increased adoption, this shift has been supercharged by a wide slew of technological innovations in the field.
One example is the integration of NFTs into DeFi platforms, something that unlocks brand-new opportunities for asset tokenization. Individuals and organizations can use NFTs as collateral in DeFi borrowing and lending, boosting liquidity and dramatically growing market participation in the process.
Still, the biggest reason why the next 15 or so months are crucial is increased regulatory scrutiny.
At face value, Markets in Crypto-Assets (MiCA) regulations (entered into force in June 2023) may seem constrictive. Considering these will govern multiple areas of the industry, including client verification and crypto exchanges, they will ultimately enhance both the security and the transparency of all crypto operations on the EU territory.
MiCA is aimed at protecting end users and ensuring companies maintain verifiable reserves and uphold transparent audit practices. Naturally, this type of regulation will attract more institutional and corporate investors into the industry, drastically improving the market’s stability.
Biggest DeFi trends
Keeping your pulse on DeFi trends 2025 will allow you to find new ways of capitalizing on this growth. Here’s what to look out for:
1. Institutional adoption of DeFi
The increased maturity of DeFi protocols and regulated solutions has transformed a once niche environment into one that is attracting the attention of institutionalized investors. With secure transaction services that eliminate doubts about digital asset safety and the development of frameworks and compliance tools, navigating the regulatory landscape is no longer a problem.
Moreover, the potential for higher returns and attractive interest rates on assets that can provide a stable stream of passive income is another factor in why major operators are flooding to DeFi.
A good example of how institutional DeFi has achieved a new level of simplicity is Bitlocus.
With the Bitlocus DeFi platform, institutions can reap the full benefits of decentralized finance without dealing with security risks or thinking about compliance, while also gaining instant access to trustworthy investment funds. This is partially accomplished by providing users the ability to use fiat, hence, they can leap over all technical obstacles associated with crypto trading.
In other words, DeFi knowledge is not a requirement as all transactions are processed by the platform.
Our Fiat-DeFi Management Platform (FDMP) is targeted to bring traditional deposit investors to DeFi based on better yield and a straightforward user interface. No crypto or DeFi knowledge is needed since the end-user only transacts in fiat assets and all DeFi-based transactions are automatically processed by the Bitlocus platform.
2. Cross-chain interoperability
Cross-chain interoperability is a huge paradigm shift in DeFi. Individual blockchains will no longer be isolated as applications on different chains will easily swap messages and tokens between one another.
This will enable large-scale DeFi operations, boost the individual freedom of users, and most importantly, attract more users into the industry. The reason why is simple - the liquidity will increase and so will the usability of various DeFi solutions.
Cross-chain interoperability is a work in progress, but there have been many advancements lately. With Bitlocus, for instance, not only does the $BTL token provide cross-chain utility through a partnership with MELD, but it also supports cross-chain, non-custodial asset management addressing different blockchain preferences. At the time of writing, six chains are supported, but it’s only a matter of time before new networks are added to the list.
3. Regulatory developments and compliance
In addition to the aforementioned MiCA initiative in the EU, other regions are following suit. U.S. regulatory bodies are closely monitoring the space, making certain projects comply with current commodities and security laws.
The biggest emphasis of DeFi regulations is, as you would expect, on know-your-customer (KYC) and anti-money laundering (AML).
There are plenty of challenges surrounding regulatory developments that are directly related to the nature of DeFi. For starters, the technological complexity of blockchain technology is hell for legal oversight simply because there are no centralized points of control. The same can be said about the rapid innovation in the field that makes it hard for regulatory frameworks to catch up.
Crypto projects need to take a proactive approach to compliance. Bitlocus, for instance, implements a strict AML policy that ensures user protection while also helping them navigate the intricate legal landscape. It complies with all the relevant AML obligations through internal measures that mitigate the risk of money laundering or terrorist financing, including identity establishing, monitoring customer activities, risk assessment, and reporting suspicious activities to authorities.
4. Integration of traditional finance with DeFi
The decentralized finance future may be more centralized than you think. Plenty of big traditional players are uncovering the potential of tokenization and are open to using blockchain infrastructure. It’s not hard to imagine a world where crypto becomes a new investment asset class that can be utilized as collateral for traditional loans.
In other words, some DeFi principles will become important tools in the traditional finance industry, akin to cloud-based solutions.
On the other end of the spectrum, DeFi protocols are inching closer to traditional finance, bringing stringent controls and risk management practices to the table.
It’s clear that DeFi and traditional approaches to finance are getting more and more intertwined each year. Regardless of where you stand on decentralization, the pioneering technology behind DeFi combined with regulatory frameworks, will most likely mark the future of finance as a whole.
As a trailblazer in DeFi, Bitlocus already bridges the gap between the two worlds with its stringent AML policy and the ability to act as a gateway to high-level investment protocols. Lowering the entry barriers by allowing users to start trading crypto with fiat helps traditional investors avoid the common pitfalls associated with DeFi, thus representing the natural link between the accessibility of traditional finance and the potential of decentralized finance.
Leading the charge
DeFi for institutions is already gaining an incredible amount of traction. Seeing as projects are placing their attention on cross-chain operability and new regulatory developments, DeFi will become even more welcoming during the year and a half. This means that the projected growth is bound to happen if more and more projects follow suit.
Bitlocus presents a paramount achievement in the world of DeFi, embodying the key DeFi 2024 trends that will influence further developments in this industry. All the latest trends closely align with the approach Bitlocus is promoting, so it’s only natural to assume new players will see it as a positive and rewarding example - ultimately making sure DeFi reaches its maximum potential.