The radical opportunities provided by the decentralized economy have attracted a lot of interest from investors and speculators. The total cost of the DeFi protocols grew by more than 2,500% in 2020, from nearly $ 700 million in January 2020 to more than $ 20 billion in December 2020. TVL is a more beneficial account than DeFi’s market value because it accurately reflects the capital that investors are investing on. Willing to adhere to these protocols. And their commitments haven’t expired in 2020. This year alone, TVL DeFi has doubled in February to more than $ 40 billion.
On the topic: Was 2020 the year of DeFi and what is the sector expected to do in 2021? Expert response
While Davie’s growth over the past year can be largely attributed to investment in retail, 2021 turns into the year that organizations start taking action. With yields on interest-bearing assets continuing to drop to historically low levels and unique stimulus packages increasing inflation expectations, massive amounts of money are now looking for higher returns.
Future-oriented asset managers turn to DeFi. Circle, the popular issuer of US dollar currency (Stablecoin) (USDC), is about to launch its first high-capacity digital dollar account targeting enterprises. By offering loans to crypto markets that need capital rather than in saturated traditional markets, the account can offer up to 10.75% annual interest rate. While it will only serve companies in the beginning, there are many options suitable for individual investors.
How to Attract Institutional Investors to DeFi
During Defi’s rapid ascent in 2020, dozens of single attacks drained investor money, with half of all cryptocurrency attacks carried out in cryptocurrencies via DeFi protocols. Many of these vulnerabilities employ new and creative tactics like the protocols themselves. Others were repeats of previous attempts that are very easy to prevent. While losing money is unfortunate, DeFi’s security has improved significantly in recent years.
To be listed on any major stock exchange now requires a project audit as it is extremely risky for exchanges to compromise the safety of client funds. But meaningful security does not end there.
Related: Code is Key: Solutions to Beat DeFi Security Violations
It is alarming that in 2020 there were attacks that stole money from the security protocols under scrutiny. While the review focuses on a snapshot of the code prior to distribution, the process cannot take into account interactions between nodes when it is released in nature. DeFi’s dynamic rate of change means that new tools and software can create new risks.
On the topic: As confidence in auditing dwindles, the DeFi community is considering security options.
Automated security tools can constantly monitor smart contracts for a wide range of known vulnerabilities, even after they are deployed to the public blockchain. Users can also secure individual transactions by requiring that the contract they are communicating with meet a certain level of security before confirming the transaction and transferring funds.
It is important to be protected while your contract is in effect, even if everything seems to be going well.
In addition to real-time security tools, there are many decentralized insurance options on the market today. There are solutions that can protect locked user funds in the many DeFi protocols that keep DeFi users safe in the knowledge that their capital is safe in the face of unforeseen events.
We envision a world of decentralized finance where protecting your assets is as simple as checking the box before any transaction takes place, where technology within the network protects transactions before they happen, and where security is a fundamental pillar of every platform.
Combined with unparalleled profitability, a reputation for this type of comprehensive security will help lift DeFi from its current share of around 8% of the total cryptocurrency market value to a level that rivals the older economic system.