In a few years from now, 2021 will likely be viewed as the turning point for DeFi.
It’s the year that decentralized finance transformed from the ugly stepchild of crypto to a globally recognized industry supported by investors who see the potential of an open economy.
Investment in DeFi exploded in 2021, reaching a jaw-dropping $260 billion Total Value Locked (TVL) by December 1, according to analytics platform DeFi Llama. Between January 1, 2021 and the end of the year, DeFi investment grew by an incredible 1,222 percent.
At the same time, it’s increasingly clear that the industry has a major problem with fraud. More than $7.7 billion was stolen in crypto scams in 2021, according to a report by blockchain analytics firm Chainalysis — an 81 percent increase compared to 2020.
Both of these trends show that 2021 has still only “scratched the surface” of the DeFi industry’s potential, said Findora’s founders in a recent post reviewing the company’s performance over the last year.
Findora’s founders launched the platform in 2021, offering a public blockchain with programmable privacy. The company is one of several DeFi startups in 2021 that have received major interest from investors for their plans to tackle privacy issues in the DeFi industry.
“The one thing keeping institutional capital from entering the DeFi market en masse is privacy,” Findora founders wrote on Medium. “With a growing developer community, an ecosystem fund continually deploying capital towards new and exciting projects, and a perpetually improving protocol, Findora is poised to lead the charge towards institutional adoption of private DeFi, or what we call PriFi.”
Findora isn’t the only example, either. There’s plenty of evidence for a growing movement toward greater privacy in DeFi.
Governments around the world have finally started the work of trying to regulate DeFi — largely because of the increased investment in DeFi and crypto over the last two years. These regulations have created new incentives for companies like Findora to pursue initiatives aimed bolstering privacy.
And according to a recent Forbes article: “Investors are noticing.”
“Many privacy coins have proven to be solid investments in 2021, as several have quietly outperformed Bitcoin during this bull market, which bodes well for the industry moving forward,” Forbes wrote.
That rising interest from investors is part of why the Findora Foundation announced a $100 million ecosystem fund in October 2021. The fund will be used for the research and development of new privacy-preserving dApps, and has already allocated $10 million for Venice, a new AMM DEX built on Findora by a global community of developers.
In Findora’s press release, Venice is described as “a chain-agnostic decentralized exchange that leverages zero knowledge technology to enable privacy preservation AMM.”
While the DeFi industry will likely continue its growth in 2022, investors are likely to shift their focus away from many of the “shadier” projects to ones that are more likely to survive in the coming regulatory environment, said Nils Gregersen, Paycer UG founder & CTO in Hamburg, Germany.
He also echoed the sentiment of Findora’s founders that the future for DeFi is wide open for new possibilities.
“There is a lot of pump in the market at the moment,” Gregersen told Forbes. “I think in 2022 we are going to see a little cooldown in the market. DeFi will still be a thing in 2022. We have only seen the tip of the iceberg in terms of DeFi. There are many new products to come that we can’t even imagine today.”
Carolyn Coley is a blockchain reporter. She joined Smartereum after graduating from UC Berkeley in 2018.
