The Current State and Future Development of Decentralized Finance

Recently, the DeFi field has shown some new trends and changes. Compared to previous cycles, the current DeFi infrastructure has become highly standardized, mainly including three categories of applications: stablecoins, lending, and AMM. At the same time, the commoditization of DeFi projects has increased, but the concentration of leading projects is also rising.

In terms of new projects, projects like Pendle and Ethena have found new market demands through innovative product designs. In addition, some DeFi applications that do not rely on tokens have also begun to emerge, such as Polymarket and Pump.fun. This reflects that as the underlying infrastructure improves, DeFi applications are developing in a more diversified direction.

For investments in DeFi projects, the most important factors in the long run are continuous innovation capability and brand value. Security is also a crucial factor. Leading DeFi projects such as Uniswap and Aave have established a high level of brand recognition, which has become their greatest moat.

From a regulatory perspective, changes in the US political landscape may bring a more favorable policy environment for the cryptocurrency industry. However, it is also necessary to be wary of cryptocurrencies becoming a tool for partisan disputes. The process of Bitcoin entering national fiscal reserves is worth paying attention to, but it may face some resistance.

The future development direction of Decentralized Finance may include:

1. Traditional financial institutions are entering the Decentralized Finance space through methods such as issuing Layer 2 networks.
2. DeFi projects establish closer economic ties with traditional listed companies.
3. The emergence of more innovative DeFi applications to meet the needs of niche markets.
4. Further Integration of DeFi and CeFi

Overall, Decentralized Finance is still in a rapid development stage, and there is still significant room for growth in the future. However, investors need to pay attention to risk diversification and reasonable asset allocation. For ordinary investors, DeFi projects can be a part of the investment portfolio, but should not be overly concentrated.