Top DeFi Developments in 2021

1. Scaling Solutions Become Priorities

The popularity of DeFi dapps is straining the Ethereum network, causing transaction, or gas, fees to rise. As of this writing, simple token transfers can cost several dollars, while complex smart contract transactions such as opening a Vault can cost hundreds of dollars or more. Ethereum 2.0 will ultimately address the persistent gas problem and other issues, and allow the network to scale to a level that can support mainstream adoption.

Another technology allows developers to bundle transactions off-chain and submit them to the main blockchain in batches. Those bundles, called Rollups (also offered by Polygon), could enable Ethereum to support a 200-fold increase in transactions.

2. Users Embrace AMM-based DEXes

Automated Market Makers (AMMs) provide a completely new model for decentralized exchanges (DEXes), using liquidity pools and pricing set by an algorithm rooted in supply and demand instead of conventional order books. Effectively, users trade with a smart contract-based liquidity pool rather than directly with other users. It’s an elegant and user-friendly solution to trustless crypto trading that avoids the problems and complexity of moving traditional exchanges’ systems onto the blockchain.

3. Stablecoins

Described by Ethereum co-founder Vitalik Buterin as simultaneously the most valuable and most boring things to come out of DeFi, stablecoins offer users vital means of storing and transferring value on the blockchain without exposing them to the volatility for which crypto is notorious. Importantly, stablecoins are also powerful tools for enabling the efficient allocation of capital to DeFi yield farming opportunities.

4. NFTs: A Most Exciting Crypto Trend

Non-fungible tokens (NFTs) are indivisible blockchain tokens that represent a unique real-world or dig ital item. They’re quickly gaining popularity, as they prove authenticity and ownership of digital art, collect ibles, in-game items, and even parcels of virtual land. NFT marketplaces, such as SuperRare, Nifty Gateway, Rari ble, and others, enable people to buy and sell all kinds of collectibles using ETH and, increa singly, stablecoins.