DeFi has tightly entered the life of every crypto enthusiast and it’s no surprise. The very idea of the existence of an independent and transparent financial ecosystem, which is not influenced by regulators and human factors, imperceptibly brings us closer to the new digital era. DeFi’s rise to fame did not fall out of the sky, it was a natural development of the new financial system and this is how it happened.
Vitalik Buterin in 2019 said: “I’m very excited about the potential that DeFi offers in principle. The idea that anyone anywhere in the world can have access and choose their financial exposure is a very powerful thing.”
Recently, the sector of decentralized finance (DeFi) has become much more popular. According to DeFi Pulse, the DeFi market’s TVL is $94.41B (as of March 29, 2022), and DeFi Llama reports the total locked assets being at $225.78B (excluding staking). This indicates that this sector’s annual growth is reported to be approximately 200%.
MakerDAO was a pathbreaker among DeFi applications that gained wide popularity in late 2017. Since then, the total amount of funds placed in DeFi protocols (TVL, Total Value Locked) has been constantly growing. The DeFi boom came in the midst of the global coronavirus pandemic. For instance, in 2018, TVL was $928 millions, in May 2019 - $7.568 billion, in May 2020 - $9.276 billion, and in November 2021 the TVL reached a record with $107.506 billion.
Thanks to the rapid growth of DeFi, its boundaries are constantly expanding, which creates unique products built on this technology. Let's have a look at what DeFi trends we will see this year.
Defi trends
Messari is a cryptocurrency market data aggregator that provides tools for analyzing and tracking individual cryptocurrencies and the market as a whole, predicted some trends for 2022:
- The popularity of stablecoins will grow or remain at the same level. Ethereum will be the main blockchain for DeFi, and DAI will be the main decentralized stablecoin.
- Non Pegged stablecoins will appear. Their currency rate will not be pegged to the US dollar or other fiat currencies and will not be as volatile as cryptocurrencies.
- DeFi will be divided into 2 parts. CeDeFi – projects created by publicly known development teams. They will meet all regulatory requirements. AnonFi – projects that are released by anonymous development teams. They will work regardless of regulatory requirements.
- DAOs (Decentralized Autonomous Organizations) will soar to new heights in 2022 as many DeFi protocols are now using DAOs to drive their future. Meanwhile, many new NFT DAOs are emerging to support collective investment in the art of NFTs.
One of the most successful crypto stories of the year 2021 was Axie Infinity, with daily active users rising from 38,000 in April to 2.7 million in mid-November. This rise in blockchain-based gaming is likely to spark a parallel rise in GameFi, with DeFi obviously playing a big role in this.
“As we examine gaming’s performance, we see how vast its impact has been on the blockchain industry and just how powerful a propeller the play-to-earn narrative has become. Gaming accounts for half the industry’s usage and a fifth of the NFT trading volume for what’s been a record-breaking quarter. Axie beating blue-chips like CryptoPunks and NBA Top Shots to become the most traded collection ever poignantly illustrates this,” said Dragos Dunica, CDO and Co-Founder at DappRadar.
Finance Monthly magazine predicts that each popular musician will try to issue their own Music NFT, as major record labels look to break into the NFT space. There were some successful examples at the end of 2021 by 3lau, Nas and Mike Shinoda.
DeFi is evolving on many fronts, sometimes in completely different directions. Trends can always change, depending on financial needs and situations in the world. However, there is a certain clear vector of DeFi’s development, this is only movement forward. However, we should never forget about one very important detail. In order to take advantage of all the benefits the DeFi world has to offer, you need to go through KYC procedures. What is KYC? And what is wrong with it? Read on.
KYC problem
DeFi’s growth – as expected – provoked a reaction from governmental agencies and state institutions that drew attention to the fact that DeFi services do not restrict usage of their services by criminals in any way, given that AML & KYC haven’t been readily available in the sector.
KYC (Know Your Customer) is a financial institution’s primary modus operandi, which requires them to verify the private information of a person before this person can conduct any transactions. This identification serves many purposes: clientele understanding, monitoring operations, reducing liability, combating bribery and corruption. This protects companies from dealing with fraudsters and ensures the safety of customer assets.
European law consists of regulations (which are binding across the EU) and directives (which set goals). For KYC, the two most relevant pieces of European legislation are the GDPR (which is a regulation and hence uniform across the EU) and the fifth AML (a directive, along with its four predecessors). By transposing AML directives into national laws, countries can impose stricter requirements.
KYC verification is a multi-stage procedure that includes collection and analysis of customers' personal information. Through this procedure, financial institutions and service providers can determine each client’s risk level.
Unfortunately, some users believe that full verification is a violation of blockchain technology’s principle of anonymity. Users’ personal data is collected by many servers, as each service has its own database. No wonder users are afraid of data breaches and try to protect their personality. However, there is a solution to this problem – Hashbon Pass.
Hashbon Pass: born to solve the KYC problem
Hashbon Pass, or NFT Passport by Hashbon FiRe, is an NFT token and a decentralized protocol for reusable identity verification on blockchains such as Ethereum, BNB Chain, Polygon and other EVM-compatible networks. Our main mission is to facilitate a privacy-oriented KYC procedure. We're helping run KYC procedures in a safe manner, the way it's supposed to be, not completely eradicate it, since users still have to pass KYC after creating their NFT passport.
How it works?
It works like a passport or ID card in real life, which gives you access to vital services like banking, exchanges, crypto products, medicine and 18+ content. After all, there will no longer be the need to go through KYC procedure over and over again for different services or sites as Hashbon Pass represents a unified admission.
Hashbon Pass protocol is the first ever Anonymous KYC and the utilization of Tokenized All Web3 Pass (TAWP). Through which DeFi services, including DEXes, IDOs, & lending platforms, understand that they have a verified user active on their platform, determine their age, citizenship and also their presence on blacklists, as well as calculate the user’s credit score and social rating, all without needing access to their personal data.
The process of obtaining an NFT Passport consists of the following steps:
- The user registers, fills up their nickname and sends their biometric data to the verifier of their choice.
- The user pays a one-time verification fee and gets an NFT Passport through licensed verifiers.
- The user’s personal data is stored only by verifiers who issue NFT passports. Such verifiers have licenses that comply with GDPR, which gives them the authority to work with clients’ personal data.
- The user’s basic information is recorded on the blockchain – nickname, citizenship and date of birth. Scanned documents and personal data are stored by verifiers and are not accessible by third parties without the user's prior authorization.
Hashbon Pass protocol involves the participation of three parties: Verifiers, Users, & DeFi protocols that require user identification.
We strive to achieve two main goals: simplify the user's interaction with the constantly-evolving DeFi space, and preserve the core values of the industry in the face of looming government interference and regulation. You can read the detailed whitepaper to learn more about Hashbon Pass.
Versatile opportunities of Hashbon Pass
Hashbon Pass meets the demands of the three different groups of clients, paving the road for new DeFi and Web3 blockchain standards.
Users:
- Limitless access to different services using an NFT Passport;
- Convenience provided by Hashbon Pass. Users can pass 18+ verification as well as CAPTCHA through Hashbon Pass;
- Hashbon Pass provides additional options to secure your accounts through 2FA;
- Social Rating for user interaction on Web 3.0;
- Loan security.
Services:
- Secure and seamless user identification;
- SSI system, personal data can now be transferred to services, but strictly with the user's permission;
- Embeddability of marketplaces;
- Hashbon Pass protocol is easily integrated into all popular DeFi protocols as it is released on popular blockchains such as Ethereum, BNB Chain, Polygon, and other EVM-compatible blockchains.
Verifiers:
- Become Hashbon partners and join the initiative to bring a new standard to Web2 & Web3 ID procedures.
On June 30, we’ll be launching Hashbon Pass. Services that are ready to enter the new era of the NFT ID industry can book a demo here and integrate Hashbon Pass before official launch.