Open finance or decentralized finance (defi) has become a large narrative within the Ethereum ecosystem. As defi continues to evolve and develop, a few trends are rapidly gaining in popularity.

These topics and more will be covered in greater detail at the DeFi Summit in London on Sept 10th and 11th at Imperial College in South Kensington. Register today!

DeFi Maturity and Adoption

A quick look at Ethereum blockchain analysis from Alethio reveals the maturity and increased adoption of defi protocols. The first graphic shows defi protocol activity in May of 2019 while the second shows activity from August of 2019.

In a matter of 3 months, not only has the number of defi protocols with meaningful users expanded, but the cross-protocol activity of users has grown immensely. This shows the clear growth of defi and while the ecosystem is far from maturity, its active and continuous growth over the past months is a great sign for future development.

Banking the Unbanked and Financial Inclusion

According to The World Bank, 1.7 billion adults around the world don’t have access to a bank account. Crypto has sparked a large transformation in cross-border payments with the ability to easily transfer money using bitcoin or ether. Both of these cryptoassets provide people the opportunity to be their own bank without needing to sign up for a bank account. Over the past year, the crypto ecosystem has witnessed a large uptick in companies interested in serving unbanked individuals. Multiple different approaches are being taken to solve this issue. Mobile crypto wallets are helping these individuals set up an account to easily hold and transfer assets or pay remittances. Meanwhile, Facebook is continuing to develop and lobby for the creation of Libra, its digital currency aimed at helping unbanked individuals.

Compliance and Regulation

While perceived as less exciting topics, compliance, and regulation are incredibly important for open finance adoption. Almost everyday regulatory discussions yield new proposals or approved regulations for crypto entities. Most recently, FINMA, Swiss Financial Market Supervisory Authority recently allocated banking licenses to two cryptocurrency banks Seba Crypto AG and Sygnum. Additionally, an increasing amount of high profile government officials are expressing their desire or innovation and adoption of digital currencies. Head of the International Monetary Fund, Christine Lagarde, told the Economic and Monetary Affairs Committee of the European Parliament that central banks and financial regulators should embrace the opportunities such as digital currencies. VanEck Securities and SolidX Management are reportedly offering an ETF-like product for hedge funds and institutional investors.

From the existing financial sector, Franklin Templeton Investments has filed a preliminary prospectus with the United States Securities and Exchange Commission (SEC) for a government money market fund with a focus on blockchain-based shares and looks to create a collateralized stablecoin. Overall, regulation and compliance wins are occurring every week, making mainstream adoption all the more likely in due time.

DeFi Trading

Trading protocols, specifically for lending and borrowing cryptoassets such as Dharma, Compound, and DxDy have all seen impressive user growth over the past several months. Uniswap has provided a beautiful user interface for trading cryptoassets in a decentralized manner increasing the liquidity of the overall crypto market. More traditional options have also grown in popularity such as BlockFi which offers crypto interest accounts.

Edge cases are also rapidly expanding, such as Opyn a protocol for leverage trading cryptoassets like ether and other ERC20 tokens. Another alpha software Idle, is creating a rebalancing protocol for achieving the best lending interest rate in the crypto space. Set Protocol has created other types of rebalancing sets, such as the 20 Day Moving Average Crossover for ether which seeks to capitalize on short term trends to accumulate ether. Every month the crypto ecosystem observes further development of protocols, tools, exchanges and other defi products. Check out an even greater list of defi protocols and projects.

Risk and DeFi Composability

There are various risks across defi applications that are fairly prevalent including the potential presence of smart contracts bugs which can have detrimental effects if unfound. Further, not every cryptoasset or token is highly liquid which can pose a problem for trading, lending, or borrowing of funds. While not a blockchain risk, issues regarding dapp usability (i.e. losing funds by incorrectly inputting wallet addresses, difficulty maintaining CDPs, etc) still prevent retail investors from entering the space. While many of these risks are actively being addressed they still pose a barrier for greater defi and crypto adoption.

Open finance composability has started to blossom, especially among the larger protocols like MakerDAO and Compound. For instance, Instadapp provides a bridge between Compound’s lending protocol and MakerDAO’s collateral debt position (CDP) protocol enabling an individual to easily refinance their MakerDAO CDP. Simultaneously, projects like the Ethereum Name Service are working on providing real name addresses, such as Bob.eth or Google.eth which will facilitate easier interfacing between wallet addresses.

Learn More About What’s Happening at the DeFi Summit

Q: What is the DeFi Summit London?

DeFi Summit London is a 2-day community conference connecting DeFi entrepreneurs, liquidity providers, academics, investors, economists, regulators and others who are looking to learn and network in the Decentralized Finance industry.

Location: Imperial College, South Kensington London

Dates: September 10 & 11, 2019

https://defisumm.it

Q: What are the themes of the event?

The summit is focused on 7 core themes: Banking The Unbanked & Financial Inclusion, DeFi Maturity and Adoption, Compliance & Regulation, DeFi Trading, Open Finance & Economic History, Risk and DeFi Composability.

Q: How can I register to attend?

Due to limited capacity, this summit will be invitation-only. Request your invitation by filling out the application form (link here): https://airtable.com/shrI8FOwzCmEN1cKc

Q: How is ConsenSys participating in the event?

ConsenSys sponsoring the event and Lex Sokolin is giving a keynote presentation on Macro trends and DeFi and Min Teo is moderating a panel on Fintech.

Keynote: Macro Trends and DeFi

By Lex Solokin (ConsenSys)

Lex will discuss the macro-financial and technological trends that are contributing to the exponential growth in decentralized finance. We have seen DeFi progress across the industry — from payments to banking, lending, and investments. Once there are thousands of decentralized autonomous financial manufacturers, what will be left for financial incumbents, emerging Fintechs, and global AI tech companies? This talk will also connect the dots on how these different services are likely to interact together, and how people and companies can benefit from the emerging trend.

(Panel) Fintech and ConsenSys

Moderated by Min Teo (ConsenSys), with panelists Keith Grose (Plaid), Eileen Burbridge (Passion Capital), Rija Javed (Fintech CTO), Usman Khan (Apex:E3), discussing the topics below.

Fintech companies are gaining adoption at the expense of big banks. What advice do you have for DeFi projects trying to do the same? What needs to happen in the industry before DeFi starts to gain mainstream adoption? Are there examples of UK Fintechs working to incorporate a blockchain angle to their business?