With more than 5,000 cryptocurrencies on the market, it’s safe to say that the new space is quickly becoming dizzying. Beyond Bitcoin, Ether and other large tokens, many investors aren’t up-to-date on the full assortment of up-and-comers.
Decentralized finance, or “DeFi,” may be changing all of that. The technology was born on the blockchain and is aiming to disrupt traditional financial services offerings and providers.
“Centralized systems and human gatekeepers can limit the speed and sophistication of transactions while offering users less direct control over their money. DeFi is distinct because it expands the use of blockchain from simple value transfer to more complex financial use cases,” writes Alyssa Hertig for CoinDesk.
Currently, the combined market value of DeFi currencies is about $61 billion, with the largest, Maker, sitting at $9.43 billion. Other members of the group include Aave, Compound, and UniSwap.
The overall DeFi universe is populated by just over 100 tokens. While some at the bottom end of the group are highly speculative with penny stock-esque market values, it’s still an asset class worth getting to know for crypto investors. The reason is simple: imminent disruption.
“The scope for potential disruption in financial flows thanks to blockchain-based solutions is still enormous, in our view,” according to VanEck research.
DeFi already has an important card to play: it can compete on price and win. With that, it’s reasonable to expect that DeFi will command an increasingly larger share of the non-Bitcoin blockchain market going forward.
“The banking revenue pie could shrink by as much as 20% thanks to the deflationary impact of the blockchain and digital asset platforms might take a larger 7.5% dollar share of a more efficient system,” notes VanEck. “Those two scenarios would produce annual non-Bitcoin blockchain network fees of $145B – $180B.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.