Once the dust of this market has settled, will DeFi emerge as crypto's main use?
The TVL within DeFi has held on to over $39 billion despite the market crisis in 2022. DeFi has democratized access to financial services, as it doesn’t need a centralized organization to onboard users. Apart from the democratization, DeFi has also opened up new models like automated market making.
However, in March, rumors about the credibility of the Terra ecosystem and its algorithmic stablecoin started to emerge. As the market took a further fall through April and May, the network collapsed leading to a broader market sell-off. The Bitcoin network is starting to see utility as the Lightning Network allows projects to build on top of it. Cash App integrated the Lightning Network for faster Bitcoin transactions. There are several other payment applications that could potentially change the “store of value” narrative for the apex asset.
However, more needs to be done to address security vulnerabilities around oracles and cross-chain bridges. More decentralization of cross-chain bridges is a good step forward. Also, DeFi platforms will start considering insurance products more seriously to protect user funds. Firms like CertiK and Hacken offer specialized cybersecurity solutions to Web3 platforms.The failure of several prominent centralized exchanges and platforms in 2022 has already helped shift volumes to DeFi platforms.
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