2020 is the year of the latest BTC Halving and we had a huge DeFi Summer in 2020 with the birth of DEXs and projects in the DeFi sector. Investors are attracted to yield farming's high returns. The year began with a modest $700 million locked in DeFi protocols. By December, that figure had skyrocketed to $15 billion, fueled by innovations like yield farming, where users deposit crypto to earn high returns
[1].
DeFi is the heart of each blockchain ecosystem, where money flows and circulates to make the entire ecosystem grow stronger. Therefore, I believe that DeFi will still exist and grow strongly in the upcoming cycle.
In 2023, the development of Layer-1 and Layer-2 blockchain platforms has helped increase transaction speeds and reduce fees, lowering the barrier to entry for investors in crypto and especially in DeFi.
Currently, we see the emergence and success of projects in the DeFi sector in the directions of Liquid Staking
[2] (LSD:
Lido) and Liquid Restaking
[3] (LRD:
EigenLayer) on Ethereum. Profits from them are made up of many layers and are really attractive to investors and what is more remarkable is that this model can be completely replicated to other POS blockchains.
I used to think that with the increase in BTC price, Layer-1, Layer-2 or GameFi would lead the market into a new bullrun in 2024. But now, maybe we will see DeFi Summer 2.0 in 2024. I have tried to learn about Liquid Staking and Liquid Restaking, they still have the same weaknesses and unsustainability as Yield Farming but it cannot be denied that they are attracting money from investors and achieving huge TVL.
Do you think DeFi Summer will return in 2024? Do you believe in the sustainability of the LSD and LRD mechanisms?
[1]
The 2020 Year In Review: DeFi[2]
DeFi’s Next Big Thing: Liquid Staking Derivatives[3]
DeFi Trends in 2024: Liquid Restaking & LRT