DeFi
Solana Foundation — TradingView News
Life is getting harder for decentralized finance (DeFi) protocol developers. New use cases that directly appeal to consumers are being offset by inconsistent regulation and fierce competition, the Solana Foundation concludes in a recently published report.
The Solana overview provides a detailed yet concise history of the evolution of DeFi. It traces the growth of blockchains from simple digital currency exchanges to complex ecosystems that offer opportunities for lending, borrowing, yield generation, and more, creating a DeFi consumer market.
The introduction of stablecoins marked a turning point. “It is no exaggeration to say that stablecoins have proven to be one of the major ‘breakthrough applications’ of cryptocurrency so far,” the report said.
The Growing Pains of DeFi
The report examines the barriers to the expansion of DeFi as well as its growing usage. It cites unstable demand, unsustainable incentive structures, ineffective governance models, and security risks. The role of the hostile regulatory environment in the United States is also examined. Cointelegraph
Technical differences have emerged between blockchains, leading to specialized use cases for chains and competition for users. Blockchains with a large existing user base and those with the lowest fees will attract different developers, Solana noted. Innovation can have a downside:
“In many cases, users end up feeling overwhelmed by the number of possible applications to choose from or become wary of blockchain applications in general. […] It has also become more difficult for existing users – let alone ordinary people – to find meaningful and lasting value when interacting with DeFi applications.”
DeFi has a bright future
Diversification and the development of “super apps” have benefited blockchains. Uniswap’s acquisition of Crypto: The Game and Solana’s launch of customer loyalty platform Bond are examples. So is blockchain’s arrival on social media. The rapid development of the TON chain embodies both of these trends. 
Solana concludes that the development of DeFi has been “rapid and spectacular.” It is creating new markets and penetrating existing ones:
“Emerging trends point towards greater integration with existing Web2 infrastructure, improved user experience and tailored approaches to foster social interactions and user loyalty.”
The report goes on to say that developers can expect competition to intensify as existing challenges become more acute and their choice of blockchain becomes more crucial to their success.