The Future of DeFi: 2024 Trends and What’s Coming in 2025

by Victor Solomon

Decentralized Finance (DeFi) has rapidly evolved over the past few years, revolutionizing the financial landscape by offering alternatives to traditional banking and financial services. Built on blockchain technology, DeFi eliminates intermediaries like banks and brokers, enabling peer-to-peer transactions, decentralized exchanges, lending, borrowing, and yield farming. Since its inception, DeFi has seen exponential growth, with billions of dollars locked in smart contracts across various platforms. This shift towards decentralization has attracted both individual users and institutional investors, offering greater transparency, lower costs, and broader financial inclusion.

Let’s explore the trends and projections shaping the future of DeFi. As we move into 2025, industry experts anticipate significant changes driven by regulatory developments, technological innovations, and increasing adoption by traditional finance. We will dive into these trends, as well as expert predictions for what 2025 might hold for DeFi.

The DeFi Landscape in 2024: What’s Changing?

This year, several significant trends have emerged in DeFi, including the adoption of Layer 2 scaling solutions, the merging of blockchain and AI, and a growing interest from traditional financial institutions, according to experts speaking with The Block.

Alvin Kan, COO of Bitget Wallet, highlighted that in 2024, the main trend in DeFi is its increasing integration with traditional finance (TradFi). He noted that TradFi institutions are utilizing DeFi tools like automated liquidity provision and smart contracts, while the tokenization of real-world assets is unlocking liquidity and expanding investor access on DeFi platforms. Kan emphasized that traditional financial players are recognizing DeFi’s benefits, such as higher yields, transparency, and efficiency, reinforcing its role as a transformative force.

Kean Gilbert, institutional contributor at Lido Finance, agreed that institutional adoption of crypto has been the key driver of DeFi’s growth this year. He specifically pointed to the launch of spot Bitcoin and Ether exchange-traded funds, which have attracted traditional institutions into DeFi, broadening its market reach. However, Gilbert also raised concerns about whether these inflows truly support decentralization or risk consolidating power, as institutions weigh the balance between convenience and Ethereum’s core values of resilience and neutrality.

Layer 2 rollouts aimed at addressing Ethereum’s scalability challenges emerged as a significant DeFi trend in 2024, according to Brecht Devos, co-founder of Taiko Labs. Devos explained that these efforts reflect the growing demand for networks capable of operating faster, more efficiently, and scaling to accommodate large DeFi ecosystems and decentralized applications (dApps) without sacrificing decentralization, which is a core principle of DeFi.

As Ethereum struggled with high fees and network congestion, Solana began to gain traction in the DeFi space. In fact, by November, the decentralized exchange (DEX) volume on Solana surpassed that of Ethereum for the first time. According to data from The Block, Solana’s DEX volume was 217% higher than Ethereum’s in the second week of November.

However, despite Solana’s growing metrics, some in the crypto community raised concerns about the network’s decentralization. Critics pointed out that Solana is facing significant issues with bot activity, which could potentially undermine the integrity of its decentralized nature.

Devos emphasized that while Solana’s faster and cheaper transactions have attracted attention, the network cannot match Ethereum in terms of decentralization and security. He argued that these critical qualities make Ethereum the foundational platform for truly trustless applications, which are essential for the future of DeFi.

Meanwhile, DeFi gained even more momentum with the reelection of U.S. President Donald Trump, a well-known crypto supporter. His reelection, coupled with a generally positive sentiment across the broader crypto space, is expected to benefit the DeFi sector. Additionally, Trump’s association with a DeFi project led by his family members suggests that the new administration may take steps to reduce regulatory hurdles and support DeFi’s growth.

In terms of financial performance, DeFi experienced a significant boost in November, with monthly revenue reaching $206 million. This marked a remarkable 114% increase from October’s $96 million, indicating strong growth and investor interest in the DeFi space.

Predictions for DeFi in 2025: What Experts Expect

Experts predict that regulatory easing and clearer rules for the crypto industry are likely to support DeFi’s growth under the upcoming U.S. administration.

“Trump’s emphasis on deregulation and economic growth could create ideal conditions for DeFi to flourish,” stated ETHDenver Founder John Paller. “However, we need policies that protect innovation while allowing builders to experiment without fear.”

A more direct impact on DeFi could come from the new U.S. administration providing clarity on whether crypto tokens are considered financial securities, according to Jawad Ashraf, CEO of Web3 entertainment firm Vanar.

“This will encourage more fee-switch implementations (as already seen with Uniswap and Aave) and provide a legal path for distributing protocol revenue to token holders as dividends,” Ashraf explained, suggesting this could eventually introduce crypto yield to traditional finance sectors.

Meanwhile, NEAR co-founder Illia Polosukhin predicted a significant shift for the entire Web3 ecosystem by 2025, driven by “intents.”

“This will not only expand what users and app developers can do but also allow AI agents to interact and transact across both Web2 and Web3,” Polosukhin said. “This will revolutionize how we engage with the internet.”

As 2024 comes to a close, more projects at the intersection of AI and crypto emerged. AI agents like ai16z and Truth Terminal gained substantial attention on social media, causing rallies in related tokens. Earlier in December, FRAX stablecoin developer Frax Finance revealed plans to develop an AI tech stack for launching fully autonomous, sovereign tokenized AI agents.

DeFi is poised to play a transformative role in the future financial ecosystem by offering decentralized, transparent, and more efficient alternatives to traditional financial services. As the sector continues to evolve, it is expected to expand access to banking, lending, insurance, and investment opportunities, particularly for the unbanked and underbanked populations globally. By removing intermediaries and relying on smart contracts, DeFi can reduce costs and increase the speed of financial transactions. Also, the integration of DeFi with traditional finance could lead to a hybrid financial system where blockchain technology and decentralized protocols work alongside conventional institutions, fostering innovation and greater financial inclusion.

The Role of Blockchain and Layer 2 in the Future of DeFi

Blockchain upgrades are necessary for the continued growth and scalability of DeFi, as they address key challenges such as transaction speed, network congestion, and high gas fees. With the increasing adoption of DeFi platforms, blockchain networks must evolve to handle a higher volume of transactions while maintaining security and decentralization. Technological advancements like Ethereum 2.0, which transitions from proof-of-work to proof-of-stake, aim to improve scalability by making the network more efficient and energy-friendly. These upgrades are critical for DeFi’s ability to scale effectively and support the growing demand for decentralized financial services without compromising performance or security.

Layer 2 solutions, including technologies like optimistic rollups and ZK-Rollups, play an important role in enhancing the efficiency of DeFi networks by addressing scalability issues. Optimistic rollups process transactions off-chain and then settle them on the main chain, reducing congestion and lowering transaction fees. ZK-Rollups, on the other hand, use zero-knowledge proofs to validate transactions off-chain and ensure the integrity of data before submitting it to the blockchain. Both solutions significantly boost transaction speed, reduce costs, and improve the overall user experience for DeFi platforms, making them more accessible and efficient for both developers and users.

As DeFi continues to grow, there is an increasing focus on sustainability within the space. With concerns about the environmental impact of energy-intensive proof-of-work blockchains, the DeFi sector is shifting toward more eco-friendly innovations. Blockchain networks such as Ethereum 2.0, which uses proof-of-stake, are designed to reduce energy consumption while maintaining security and decentralization.

Projects within DeFi, also, are exploring carbon offsetting and sustainable practices, aiming to balance innovation with environmental responsibility. This shift toward sustainability ensures that the expansion of decentralized finance does not come at the expense of the planet, promoting a greener future for the entire blockchain ecosystem.

How to Prepare for the Future of DeFi

For investors looking to stay ahead in the rapidly evolving DeFi space, it’s crucial to stay informed about emerging trends and developments. This includes closely monitoring the progress of key blockchain upgrades, such as Ethereum 2.0, and the growth of Layer 2 solutions that aim to improve scalability and transaction speed. Diversifying investments across a range of DeFi projects—such as lending platforms, decentralized exchanges, and stablecoins—can help mitigate risk while capturing the growth potential of different sectors. Additionally, staying updated on regulatory changes and their impact on the DeFi market will help investors make informed decisions and avoid potential pitfalls.

For developers, the future of DeFi offers ample opportunities to innovate and build the next generation of decentralized applications (dApps). Keeping an eye on the technological advancements, such as advancements in smart contract functionality, interoperability protocols, and Layer 2 solutions, will be key to creating scalable and user-friendly applications. Developers should focus on enhancing user experience, security, and seamless integration with existing financial systems. Building applications that solve real-world problems, such as decentralized lending or cross-border payments, can drive adoption. Moreover, engaging with the growing DeFi community and contributing to open-source projects can provide valuable insights and collaborations that foster growth.

For users, navigating the growing DeFi ecosystem safely and effectively requires a good understanding of the platforms and tools being used. It’s important to practice caution when interacting with DeFi platforms, ensuring that they are secure and trustworthy by researching audits and user reviews. Using hardware wallets for storing assets and enabling two-factor authentication can enhance security. As the ecosystem grows, users should also familiarize themselves with the risks involved, such as smart contract vulnerabilities and the potential for rug pulls. By being educated on how DeFi works, diversifying investments, and utilizing risk management tools, users can navigate the space effectively and safely.

Which crypto will explode in 2025?

With Donald Trump’s victory in the U.S. elections, the cryptocurrency market has entered a period of significant growth, sparking renewed enthusiasm throughout the industry. A major milestone has been reached as Bitcoin’s price has surpassed the $106,000 threshold.

The crypto bull market is in full force, leaving many to wonder: What’s next? Which coins are set to explode in 2025? Which ones have the potential for 1000x growth?

With over 10,000 cryptocurrencies currently available, only a small fraction ever achieve real success. Why is that? The answer lies in their utility, scalability, and adoption.

Successful cryptocurrencies usually offer something valuable, whether it’s speeding up transactions, reducing fees, or enhancing privacy. For example, projects focused on decentralized finance or enabling smart contracts often gain popularity due to their innovative use cases.

A cryptocurrency’s success is also closely tied to scalability. Blockchains that can handle large volumes of transactions without slowing down or increasing costs are particularly appealing. Their reliability makes them more attractive as the demand for seamless digital transactions continues to rise.

Strong community support, strategic market positioning, and solid partnerships play a key role in driving cryptocurrency adoption. These factors, combined with a transparent and experienced development team, create an environment that fosters trust and growth in the crypto space.

Decentralized cryptocurrencies are particularly appealing to users who prioritize security, privacy, and control, as they are not governed by a single entity. This structure promotes trust and transparency, as the power is distributed across the network. In contrast, centralized cryptocurrencies often raise concerns about control and transparency, with one entity holding significant power over the system. Many users prefer decentralization because it offers greater autonomy and reduces the risk of manipulation.

Without these core elements—community support, decentralization, and a trustworthy development team—many cryptocurrencies struggle to differentiate themselves in the increasingly competitive market. As a result, they often fail to gain traction and stand out among the thousands of options available.

Read also: Are we in Altcoin season yet?

As the market continues to evolve, certain cryptocurrencies show exceptional potential for rapid expansion. Below are some of the top coins to watch in the coming years.

Ether

Ethereum continues to dominate the blockchain space, playing a central role in powering decentralized applications (dApps) and smart contracts. With the increasing popularity of decentralized finance (DeFi) and non-fungible tokens (NFTs), Ethereum remains well-positioned to maintain its leadership in the sector.

In 2022, Ethereum underwent a major upgrade, transitioning to Ethereum 2.0. This shift improved the network’s scalability and energy efficiency, enabling it to handle more transactions while maintaining a high level of security. These improvements have further solidified Ethereum’s role in the blockchain ecosystem.

Looking ahead, Ethereum is set to undergo the Pectra upgrade in 2025, which will boost the network’s scalability even more. This upgrade will enhance its transaction processing capabilities and introduce new features, such as social recovery for wallet access. These changes are expected to make Ethereum more resilient, reinforcing its potential for continued growth in an increasingly dynamic blockchain environment.

With these upgrades on the horizon, Ethereum’s future looks promising as it adapts to meet the demands of a rapidly evolving digital landscape. The improvements will ensure it remains a top choice for developers and users alike, cementing its place in the cryptocurrency market for years to come.

Some forecasts suggest that Ether (ETH) could break new records, potentially surpassing $5,000, driven by rising demand and its limited supply. Others are even more optimistic, predicting that ETH could exceed $10,000, fueled by growing institutional interest and solid market fundamentals.

SOL

Solana continues to make significant strides in the blockchain industry, distinguished by its high transaction speed and low fees. These features are attracting developers from various sectors, contributing to the network’s growing influence, particularly in decentralized finance and gaming. Despite past network challenges, Solana has been enhancing its scalability and developer tools, improving its ecosystem. With its ability to process transactions quickly and a steadily increasing user base, Solana is poised for further success in 2025, positioning itself as a leading blockchain platform.

Solana has also captured attention for its fast transaction speeds and low fees, which have made it appealing to developers across different industries. While specific price predictions for Solana coin, SOL, in 2025 are less common, its growing role in decentralized finance (DeFi) and gaming suggests that it could become a leading player in the blockchain space. Ongoing improvements to scalability and developer tools are further strengthening Solana’s ecosystem, positioning it for continued success in the coming years.

LINK

Chainlink, a decentralized oracle network, plays a vital role in bridging the gap between blockchains and real-world data. Its capability to securely transmit external data to smart contracts is important to the blockchain ecosystem.

As partnerships expand and its usage grows within decentralized finance (DeFi) and smart contracts, Chainlink is on a strong growth path. With notable collaborations, including with Google Cloud, SWIFT, and the World Economic Forum, Chainlink’s role is becoming increasingly important. As demand for decentralized data services increases, Chainlink’s unique position in blockchain infrastructure gives it significant potential for growth, particularly as blockchain technology spreads across more industries.

Analysts project that LINK could reach a price range of $30 to $38 by the end of the year, supported by increased adoption and technological advancements. On the more optimistic side, experts like Nick Petisce foresee LINK soaring to greater heights in the next 3-5 years, driven by the adoption of Chainlink’s Cross-Chain Interoperability Protocol (CCIP) and partnerships with major financial institutions.

Read also: A Deep Dive into Chainlink (LINK)

Risks and Considerations

Investing in cryptocurrency offers the potential for great profits but carries significant risks. Even established projects like Ethereum, Solana, and Chainlink are not immune to market volatility or external disruptions. Price fluctuations can result in considerable losses if one is not prepared, and while expert predictions provide insight, they cannot guarantee future outcomes.

Alsp, the crypto space commonly attracts fraudulent schemes, making it essential to perform thorough due diligence. It is important to evaluate each cryptocurrency’s fundamentals, consider its long-term potential, and avoid investing money you cannot afford to lose. Diversifying your investments, steering clear of high-risk trades, and protecting your financial well-being are key to responsible investing. Ultimately, informed decision-making is the cornerstone of a successful investment strategy.

Read also: How to Analyze DeFi Projects

Victor Solomon is a technical analyst at Crypto Asset Buyer (CAB). Over the years, Victor has gained valuable expertise in market analysis, risk management, and community management within the cryptocurrency ecosystem. The founder of Soluvic Crypto Hub, a crypto community where he equips newbies in the space, Victor’s mission is to empower individuals to uncover opportunities and safely navigate risks in the blockchain industry. Victor’s academic foundation includes a BSc. (Ed) in Mathematics, a credential that underpins his strong analytical and problem-solving abilities. Currently, he is expanding his technical expertise as a Software Development student at Brigham Young University. He is an Ex African Manager of Newscrypto..

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