The coming of the bull run, 8 major trends worth following in the Decentralized Finance field

This article is specially written by Vincent Maliepaard, Director of Marketing at Into TheBlock.

Decentralized Finance is driving one of the most transformative waves of innovation in decades. While some may perceive DeFi as a mature industry, it is still rapidly evolving, constantly introducing tools that have the potential to redefine TradFi.

Let's take a look at some of the most promising developments in Decentralized Finance and the protocols at the forefront of this revolution.

1. Yield AMM protocol

The Yield AMM (AMM) is launching a groundbreaking approach to managing and trading yield.

Pendle Finance and other protocols separate the income generated by assets from the principal value, allowing investors to speculate or hedge future income without selling the underlying assets.

This opens the door to new trading strategies, reshaping the way investors handle Intrerest Rate risk and bringing greater flexibility and Liquidity to fixed income investment portfolios.

Yield AMMs are at the forefront of optimizing capital efficiency, unleashing risk-adjusted returns previously unattainable in traditional finance.

2. Yield Aggregator and abstract protocol

As Decentralized Finance becomes increasingly complex, yield aggregators are becoming important tools to maximize profits while minimizing complexity.

Platforms such as Yearn Finance automatically optimize yield by searching for the best opportunities in various protocols, thereby reducing the need for users to manually manage multiple positions.

In terms of abstraction, the new protocol makes it easier for participants to interact with the Decentralized Finance system without requiring extensive technical knowledge.

These tools collectively break down the entry barrier, making DeFi more intuitive and easier for ordinary users and institutional participants seeking efficient, hands-free solutions to use.

3. DerivativesDEX with comprehensive lending market

The momentum of derivatives trading in Decentralized Finance is strong due to the direct integration of lending services into Decentralized Exchanges (DEXes). Platforms like dYdX and Synthetix have taken the lead in adopting this approach, allowing traders to use borrowed assets for derivatives trading or hedging positions.

This creates a seamless experience for experienced traders seeking advanced Risk Management and capital efficiency.

With perpetual contracts and synthetic assets, these platforms lay the foundation for deeper Liquidity and more complex trading strategies for Decentralized Finance, especially as institutional interest in the Decentralization market continues to grow.

4. Flash Loan Treasury and One-Click Recycling

Flash loan is one of the most unique features of Decentralized Finance, allowing users to borrow large sums of money without collateral, provided that the loan is repaid in the same transaction.

The next development in this field involves the flash loan insurance pool, which can execute complex strategies such as 'looping' and 'repeated borrowing' with just one click.

What used to require professional skills can now be used by anyone, making advanced financial strategies more accessible.

Into TheBlock and some yield aggregators have implemented similar structures in their vaults, but applications focused on the public are still in very early stages.

5. Tokenization of Real World Assets (RWA)

As real-world assets (RWA) such as real estate, commodities, and stocks are tokenized, the influence of Decentralized Finance is expanding beyond the blockchain.

Projects like Ondo Finance and initiatives from institutions like BlackRock's BUIDL Fund are leading the way, bringing these traditionally less liquid assets into the Decentralized Finance ecosystem.

The tokenization of RWA has released Liquidity into previously inaccessible markets, providing new Collateral options for Decentralized Finance loans, and expanding the scope of Decentralization finance.

This trend is blurring the boundaries between TradFi and DeFi, attracting institutional capital and expanding the potential of the Decentralization market.

6. Credit system based on protocol

Decentralized Finance is rewriting the credit rules using a system based on protocol, which evaluates creditworthiness using local data on the blockchain (such as transaction history, staking behavior, and governance participation).

This Decentralization approach provides a more inclusive credit market, expanding credit channels for individuals and businesses that traditional Financial Institutions may overlook.

By bypassing central banks and traditional credit scoring systems, Decentralized Finance will democratize access to capital and create new lending opportunities for a global audience.

Although there is currently no mature protocol that can provide a fully implemented solution in this field, we will eventually see the first batch of important applications appear in Decentralized Finance.

7. Trade and Accounts Receivable Financing

Decentralized Finance provides faster liquidity to businesses through trade and accounts receivable financing, and is beginning to change global commerce. By tokenizing invoices and using them as collateral for loans, companies can access funds more quickly, especially in industries with longer payment cycles.

Goldfinch is an example of a Decentralized Finance protocol, which connects Decentralized Finance capital with traditional accounts receivable financing to provide Decentralization loans to real-world businesses.

This innovation provides a real alternative to traditional bank loans, democratizes trade financing, and opens up new Liquidity channels for global trade.

8. Intellectual Property (IP) Differentiation

The tokenization of Intellectual Property (IP) assets is a new trend with great potential in the Decentralized Finance space. By dividing ownership of patents, trademarks, and copyrights, enterprises can create new markets for tokenized assets supported by intellectual property, allowing investors to buy and sell stakes in these valuable assets.

VitaDAO is one of the pioneers in this field, focusing on collective ownership and tokenization of biomedical intellectual property, especially in the field of longevity research.

This method not only provides a novel financing channel for research, but also opens up intellectual property investment to a wider audience, making intellectual property assets more liquid and accessible.

There is no sign of a slowdown in the innovation cycle of Decentralized Finance. With the tokenization of real-world assets, the simplification of yield strategies, and the reimagining of the credit system, Decentralized Finance is ready to fundamentally change the financial landscape.

These trends have not only driven the rise, but also attracted more institutional participation, and narrowed the gap between the TradFi and Decentralization ecosystems.

With the popularization of these innovations, Decentralized Finance will continue to break possible boundaries, release new markets, reshape capital flows, and redefine the finance we know.