DeFi Bull Market Surprises with RWAs and Recursive Airdrops

The year 2024 holds significant potential for decentralized finance (DeFi) as more real-world assets are tokenized and brought onto blockchain networks. According to industry experts, this trend is a major development that has gained traction. Tokenized U.S. Treasuries (T-Bills) and other real-world assets have seen growth, although at a slightly slower pace due to less enticing rates. One example of this trend is BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), which converges tokenized real-world assets with stablecoins. The CEO of crypto market maker Keyrock, Kevin de Patoul, believes that these are just the beginning steps toward a larger transformation where all assets will be digitized, although he admits that this process will take time.

The tokenization of assets, a trend that has been widely predicted, has proven to be a surprising and significant shift. Traditional institutions have realized the value and fit of decentralized networks, leading them to directly deploy onto Ethereum and other blockchains. This achievement was not foreseen just a few years ago and demonstrates the evolution of DeFi.

The founder of yield-enhancing asset tracker Tranchess, Danny Chong, sees the predictions made in 2023 about DeFi becoming a reality in 2024, particularly in relation to real-world assets. He notes that financial giants like Fidelity and BlackRock are increasingly interested in and investing in crypto, blurring the lines between traditional finance and the crypto world. Chong also mentions the emergence of centralized DeFi as a surprising trend, with some users now accepting that centralization can provide protection and returns.

The idealism that once characterized the DeFi sector may be eroding. During bear markets, there is often a focus on building and good intentions, but as the market becomes bullish again, those intentions can be easily forgotten. The recent trend of “recursive airdrops” has emerged, where users can earn eligibility for airdrops by depositing liquidity on different protocols. The rules for qualification are not always clear, leading to uncertainty and speculation. The market can expect a proliferation of layer-2 solutions, but it is anticipated that many will fail.

2024 holds promise for the continued growth and development of DeFi as more real-world assets are tokenized and brought onto blockchain networks. Despite challenges and changing dynamics, the industry is evolving and seeing increased interest and investment from traditional financial institutions.