As per the data by DeFi Llama, the total value locked, or TVL, in decentralized finance (DeFi) has risen to $250 billion as 2021 draws to a close, with the majority of activity taking place on Ethereum.
While the tremendous growth of the business is reflected in TVL valuations, Charles Hoskinson, the founder of Cardano (ADA) has forewarned about the obstacles that DeFi faces. Hoskinson discussed DeFi’s potential as well as Cardano’s small involvement in the industry in a YouTube video titled “DApps and Cardano DeFi Alliance.”
DeFi lost more than $10 billion in 2021
Although he feels that 2022 will be a “major year” for DeFi and Cardano, he also believes that “there is still so much to be done,” notably in terms of certification requirements, DApp production quality, and security. In this year alone, about $10.5 billion was lost in the sector due to hacks, frauds, and theft, according to him.
As TheCoinRise reported, Elliptic recently posted a report which revealed that the exploits in DeFi protocols have topped $12 billion in 2021.
According to Hoskinson, who has been on a decade-long journey to revolutionize traditional financial system, developers and innovators need to have a longer-term perspective:
“It’s very hard to do this kind of engineering and to do it right, with an eye and foresight for the future. Unfortunately, many of the projects in this space will not stand the test of time. It’s just a fact that we will see a great extinction occur in the next five to 10 years.”
Hoskinson discussed Cardano’s stated goals during the session, highlighting the company’s 127 projects in development as well as how the first half of 2022 will be “an essential window for commercialization and usage of Cardano products.” Due to the NFT revolution, he expects the user base to grow tenfold from the existing 2 million users.
The nascent DeFi sector only became trending after the summer of 2021. In October TVL in the DeFi sector crossed the $205 billion mark.