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Decentralised Finance: Usecases & Risks for Mass Adoption

DeFi has seen substantial evolution over its 2 years in existence. Our report looks at the current landscape and the coming 10 years.

Evelyne

Buzziol

July 16, 2020

Download our latest report, Decentralised Finance: Usecases & Risks for Mass Adoption, to read our full analysis of the current DeFi ecosystem and predictions for changes in the next 10 years. If you have any questions or comments, feel free to get in touch at hq@dgen.org, or if you are interested in partnering on a future report, at partners@dgen.org.

Over the last twelve years — since the beginning of the 2008 financial crisis — many legacy financial systems and practices were brought into question. This has impacted societies worldwide, with different consequences for every demographic of society.

Cryptocurrencies, programmable money, and, now, Decentralised Finance (DeFi) all arose in the wake of this crisis. They largely emerged as a way for people who are otherwise excluded from the current banking ecosystem, or fed up with the system, to engage in financial services without state or bank restrictions.

Our latest report looks at this new industry: DeFi — the hottest topic in the blockchain industry. We focus on the major usecases currently enabled, but also take some time to look at the risks involved.

This nascent sub-industry garnered a market capitalisation of over €2 billion in a mere two years, gesturing to a strong future. We, at dGen, are truly focused on looking at the potential impact of technology over the next decade. And, the amazing growth of blockchain-based financial services promises sweeping changes over the next decade.

A number of leaders of DeFi projects, such as Aave, Syntetix, ConsenSys, Reserve, Mosendo, and Nexus Mutual, shared their insights, giving us a clearer picture of what’s around the corner and how we might see wider adoption emerge. Marc Zeller, Integrations Lead at Aave, summed up the sector with:

‘The game-changing aspect of DeFi is that things that were only accessible to the very wealthy are now accessible to anyone who is able to write a few lines of code’.

And, finally, the report strongly focuses on what the impact will be in Europe and for European citizens. Europe has potentially the most developed and adopted FinTech ecosystem in the world, and DeFi is the next step for this sector. Therefore, many speculate that Europe may be one of the first places to see mass DeFi adoption.

Our top predictions for 2030 are:

  • Stablecoins will become a critical component of international payments in Europe and beyond.
  • Major audit firms, such as Deloitte and KPMG, will be a crucial part of the DeFi ecosystem.
  • Effective insurance will make DeFi a trillion dollar industry.
  • Traditional financial institutions in Europe will offer their first DeFi-enabled savings and pension accounts.
  • DeFi will provide income for thousands of gamers, streamers, and influencers.
  • There will be more pain as we grow.

We would like to say a huge thank you to Joel John for writing and research for this report, to our sponsor Aave, and all of our other contributors for giving their time.

Evelyne recently graduated in International Politics and Diplomacy at the University of Padua. She has a background in awareness campaigns and joined the dGen team as Marketing & Content Writer Intern.