DeFi in 2021

Without a doubt, DeFi will be one of the most important drivers behind the industry in 2021. We are seeing more and more traditional financial institutions embracing the benefits of cryptocurrencies, and the blockchain and crypto worlds are highly likely to positively disrupt investment banking and capital markets in 2021. In order for the two worlds to be bridged effectively, the industry needs comprehensive regulation. This regulation needs to allow for permissionless KYC/AML processes and cross-border regulatory compliance rules, and thankfully, we are seeing an increasing appetite among regulators in this sphere.

All of these elements will have a great impact on blockchain and more specifically DeFi in 2021.

2021 will likely see a large focus on regulation and compliance that facilitates bridging the worlds of traditional and decentralized finance. Once comprehensive regulation comes to DeFi, processes in the industry will likely slow, which will be a significant challenge, however bridging the gap between decentralized and traditional finance presents a significant and arguably the biggest opportunity in the field, so ensuring effective regulation in this space is essential.

Especially throughout the latter stages of 2020, Ethereum has performed very well relative to bitcoin and has gained more upward momentum against the dollar.

This trend will likely continue throughout 2021, as Ethereum is the gateway token to every other project that is available, including Defi. The increase in interest in Bitcoin has led to an increase in interest in the larger cryptocurrency ecosystem. A lot of this is not led by retail and speculation as it once was. Cryptocurrencies are now an important way for financial institutions, such as banks and hedge funds, to future proof themselves by having exposure to cryptocurrencies in the event that these do become the standard and generally accepted tokens going forward into 2021.