At the beginning of 2020, decentralized finance (DeFi) industry leaders, MakerDao, Compound, and others had locked up assets worth more than $1 billion.
With less than $700 million assets locked in December 2019, this represents a 43% increase in less than two months.
Over the past two years, new trading tools and financial products built using DeFi protocols have grown rapidly and achieved good results.
The amount of capital locked in DeFi protocols and products proves that people around the world want more efficient, decentralized financial services.
Due in large part to the Covid-19 virus around the world, global financial markets have endured a sharp selloff in the early part of 2020. This contagion was also felt in crypto markets, with significant price volatility felt across many cryptocurrencies such as Bitcoin and Ethereum. The significant decline in ETH’s price in turn led to massive liquidations across many DeFi platforms, and the total value of locked assets decreased by nearly 50% very rapidly.
This black swan event caused several issues in DeFi protocols built on Ethereum not only limited to the sharp decline in price. Additionally, due to strain put on the Ethereum public blockchain, there was congestion in verifying transactions, which led to a spike in GAS prices that power the network.
These issues have clearly shown some inherent weaknesses of other public blockchain networks and applications when used for decentralized financial services.
Due to issues like this, we designed Rio Chain with functionalities such as speed, upgradability, compatibility, interoperability, scalability, a high liquidation capacity, and more.
Relative to the traditional financial system, the DeFi ecosystem as a whole still has a long way to go.
There were many lessons learned from all the problems caused by this latest financial downturn, so the overall DeFi ecosystem has actually grown stronger. Now more than ever, there are tremendous opportunities for startups trying to build the next phase of DeFi products.
DeFi is a leading trend in the development of financial markets because It can optimize the modern financial system in terms of efficiency, asset security, wealth democratization, and decentralization.
About Rio DeFi:
Rio DeFi is a blockchain technology company with a mission to accelerate the mass adoption of digital assets by bridging traditional and decentralized finance. At the heart of the Rio DeFi ecosystem is Rio Chain, a powerful digital infrastructure tailored for mass adoption. We prioritized security, speed, scalability, and interoperability; and operate across blockchains to leverage the strengths of each.