Electric Capital Partner: 5 Major Decentralized Finance Development Trends

Author: Ken Deeter Source: X, @puntium Translation: Shanooba, Golden Finance

With the continuous development of the Decentralized Finance (DeFi) market, some new trends are quietly emerging. These trends have not only driven industry innovation, but also brought new opportunities for users and investors. Here are several key trends that I follow:

1. Convergence in the lending market

In the field of Decentralized Finance lending, the functions of multiple platforms are gradually converging, such as Aave, Morpho Labs, Silo Finance, Euler Finance, Kamino, and Fraxlend. The phenomenon of lending loops is becoming more and more common, and many platforms are developing similar functions. This convergence development means that future competition is no longer just a comparison of functions, but more about following actual application scenarios, establishing partner relationships, and improving their respective ecosystems. How to integrate the functions of these platforms with real-world use cases will be the key to the next stage of development.

2. Rebalance Gold Vault

The emergence of the Rebalance Treasury is bringing higher returns to users and providing more efficient Liquidity in the market and ecosystem. Platforms such as Tokemak, Cove, Veda Labs, etc. continuously adjust asset allocation through smart algorithms to make Liquidity more efficiently distributed. This not only increases user returns but also brings new ideas for Liquidity management in the entire market.

3. Term Assets

Market infrastructure is being built around assets with maturity and expiration dates. Projects such as veTokens, Term Labs, PENDLE, Hourglass, FRAX Bonds, etc. are being continuously developed, making assets with maturity properties an important part of the Decentralized Finance market. The introduction of these assets not only enriches the variety of Decentralized Finance products, but also makes asset management more diverse and professional.

4. Real World Assets (RWAs)

While some may find Real World Assets (RWAs) rather uninteresting, they are likely to become the pillar of on-chain economic activities. Real world assets such as Stablecoin, short-term government bonds, and reinsurance are gradually integrating with the Decentralized Finance world. On-chain capital hopes to enter more off-chain markets, while off-chain opportunities aim to utilize the convenience of on-chain Settlement and low-cost funds. Such demand integration will provide solid support for the sustained rise of the Decentralized Finance industry.

5. Stake again

Restaking is becoming an eye-catching trend in the field of Decentralized Finance, with Eigenlayer being a typical representative. Restaking allows users to stake any income-generating assets at risk to provide collateral for other protocols, greatly enhancing the flexibility and security of Decentralized Finance. The ability to transfer and diversify risks through restaking will bring more possibilities for future protocol designs.

Hope in the Bear Market

Whenever someone asks me what else is exciting about Decentralized Finance, I feel the Depth of the Bear Market. But from my observation, various teams are still continuously building, not just simply replicating existing models, but striving to piece together new important puzzles. Innovation in the Decentralized Finance field is still emerging, driving the industry towards a more mature and diverse direction. Faced with these new trends, it's really hard not to be excited about this industry.