Electric Capital Partners: 5 Major DeFi Development Trends

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

As the decentralized finance (DeFi) market continues to develop, some new trends are quietly emerging. These trends not only drive innovation in the industry, but also bring new opportunities to users and investors. Here are a few key trends I'm paying attention to:

1. Convergence in the lending market

In the field of DeFi 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 cycles is becoming more and more common, and many platforms are developing similar functions. This convergent development means that future competition is no longer just a competition of functions, but more focused on actual application scenarios, the establishment of partnerships, and the improvement of their respective ecosystems. How to combine the functions of these platforms with real-world use cases will be the key to the next step of development.

2. Rebalancing vaults

The emergence of rebalancing vaults is bringing higher returns to users and providing more efficient liquidity in the market and ecosystem. Platforms such as Tokemak, Cove, and Veda Labs continuously adjust asset allocation through intelligent algorithms to make liquidity more efficiently allocated. This not only improves the user's yield, but also brings new ideas to liquidity management in the entire market.

3. Term assets

Market infrastructure is being built around assets with terms and expiration dates. Projects such as veTokens, Term Labs, Pendle, Hourglass, and Frax Bonds are constantly being developed, making assets with term attributes an important part of the DeFi market. The introduction of these assets not only enriches the variety of DeFi products, but also makes asset management more diversified and professional.

4. Real World Assets (RWAs)

Although some people think that real world assets (RWAs) are boring, they are likely to become the backbone of on-chain economic activities. Real-world assets such as stablecoins, short-term treasuries, and reinsurance are gradually merging with the DeFi world. On-chain capital wants to enter more off-chain markets, while off-chain opportunities want to take advantage of the convenient settlement and low-cost funds on the chain. Such demand docking will provide solid support for the continued growth of the DeFi industry.

5. Restaking

Restaking is becoming a striking trend in the DeFi field, and Eigenlayer is a typical representative of it. Restaking allows users to put any yielding assets at risk and provide guarantees for other protocols. This mechanism greatly enhances the flexibility and security of DeFi. The ability to transfer and disperse risks through restaking will bring more innovative possibilities to future protocol design.

Hope in a bear market

Every time someone asks me what else is exciting about DeFi, I feel the depth of the bear market. But from what I have observed, teams are still continuing to build, not just simply copying existing models, but working hard to piece together new important puzzles. Innovations in the DeFi space continue to emerge, pushing the industry toward greater maturity and diversification. Faced with these new trends, it’s really hard not to be excited about this industry.