The poor performance of most DeFi tokens can be explained by the hyperinflationary design of the DeFi token economic model and the lack of agreed income redistribution to token holders. For example, Uniswap's UNI tokens are only used as governance tokens and fail to generate any revenue for UNI holders.
With this in mind, I have analyzed the roadmap of 25 major DeFi protocols. As you will see, many of them are redesigning their token economy models, working to build more efficient protocols through new iterations, and seeking to become progressively more decentralized.
Chainlink
Chainlink Token Economy 2.0.
Link Pledge
Expected timing: Q3 and Q4 2022
Uniswap
No shared roadmap
Aave
Launch of stablecoin GHO - a collateral-backed USD stablecoin
Expected timing: TBD
Maker
Launch of the Endgame Program.
Pre-competition phase.
EtherDai (ETH backed by pledged ETH), Elexir I (balance pool of DAI, ETHD and MKR), MetaDAO tokens (a subset of MakerDAO, each managed by its own token), Meta Elixir I (liquidity of MetaDAO tokens against MKR), Rainbow Tokenomics (allowing all MetaDAOs to coexist and introducing continuous MKR issuance of 50k MKR per year), etc.
Early stages.
MANO I (Maker node network using $MANO tokens), Maker Teleport (Layer-2 bridge), Multi-chain Dai savings rate, etc.
Mid-stage.
Elixir II, Synthetic Assets, Singularity Engine II
Endgame phase.
MANO II, Ultimate Oracle, Singlarity Engine III
Expected time: Within 12 months
The Graph
Migration from hosted services to decentralized network
Expected timing: In progress, expected by the end of Q1 2023
Synthertix
Synthetix Futures Pers V2 (with 20% SNX inflation as a bonus)
Synthetix V3 (free creation of synthetic assets, veSNX meters & time locking, differentiated debt pools, etc.)
Expected timing: 3Q and 4Q 2022
Shiba
Creating its own DeFi and meta-boundary ecosystem.
Called Shibarium's Layer-2 (hereafter L2) network
Stable coin $SHI
ShibaSwap 2.0: Shows news, trends about the Shiba ecosystem.
Expected date: TBD
Loopring
Q2 reports include
zkEVM
Loopring Earnings
Expected timing: Schedule coming soon
Pancakeswap
V2 Token Economics.
Max CAKE cap of 750M (implemented)
Staking: Reward weighted voting (vCAKE)
Staking: Boosting Farm Yield (bCAKE)
Staking: boosting IFO earnings (iCAKE) (implemented)
Expected time: Implementation in progress
Lido
stETH Login L2
Adopt distributed node technology (ETH decentralized pledge)
Create additional checks and balances on Lido governance, including negation rights for stETH holders
Expected timeline: "soon", step-by-step
Curve
Launch of Curve's stable coin crvUSD, not much official information.
Expected timeline: "soon"
Convex
Updated roadmap information.
Continued expansion of the new Curve pool
Support for enhanced pools on sidechains/L2!
Further expansion of the Frax ecosystem
Frax Weighted Voting for vlCVX Holders
Expected timing: Ongoing deployment
Frax Finance
Fraxlend: Lending platform that allows anyone to create a marketplace between a pair of ERC-20 tokens.
Expected timeline: under construction, expected in a few weeks
Compound Finance
Compound III goes live (collateralized by a single borrowable asset, etc.)
Deployed on multiple chains
Expected timeline: currently deployed on a test network
1inch
"All developments have surprised users"
OlympusDAO
Designated Balancer as the platform to host most of the OlympusDAO-owned liquidity in the OHM-DAI-ETH pool
Renamed the new Permissionless Olympus Pro contract system as a separate entity from Bond Protocol
Expected timeline: DAO vote passed, implementation within 2-4 weeks.
Osmosis
Centralized liquidity
Limit orders
Lending through Mars Protocol
On-chain identity WosmoNFT
Expected timing: TBD
Nexus Mutual
Nexus V2: On-chain Risk Marketplace
Allows creation of Syndicates (managed underwriting funds) on top of a common infrastructure
Pledges
Rules covered in the form of NFTs
Expected timing: "coming soon"
Sushi
Sushi 2.0
Trident (only available on Polygon and Optimism)
Furo: a monetary Lego protocol built on BentoBox (released)
Inari: Strategy tool
Shoyu: NFT Marketplace
Update Interface
SushiXSwap: Cross-chain DEX
Expected timing: Shoyu coming soon
GMX
Synthetic asset support: any asset with Chainlink prophecy machine price can be traded on GMX
X4 Protocol Controlled Exchange: set dynamic fees for liquidity pools, more composability, DEX aggregation, more tokens traded on GMX, better rates
PvP AMA: Match traders to each other, selectively allow liquidity providers to participate by creating new GD tokens.
Expected timing: synthetic assets first, with the remaining two following closely behind
dYdX
Launch V4 on its own dYdX chain
Expected time: will take several months of intensive development, but open source is planned for the end of 2022
Rocket Pool
To scale up Pocket Pool, plans are underway to
Reduce the mini-bonded pool of ETH and lower the collateral requirement from 16 ETH to 4 ETH.
Offer pledging services for institutions etc.
Consolidate migration of individual pledgers
Expected timing: TBD
Yearn Finance
Yearn V3
Phase 1: alpha release (expected mid-July)
Phase 2: beta: vaults limited to 20M, veYFI (similar to Cruve's ve Token)
Phase 3: stable version: decentralized, code immutable
Expected timing.
Phase 1: (expected mid-July)
Phase 2: (expected mid-August)
Phase 3: (expected mid-September)
Kyber Network
Launch of KyberSwap Elastic.
Customizable liquidity
5 fee tiers: 0.008%, 0.01%, 0.04%, 0.3%, and 1%
Automatic compounding of fees
New farming mechanism based on active liquidity contribution + volume support
Expected timing: launch in early July
Ren
Built on RenChain
Launch of Exchange Catalog: Its vision is to create the most secure cross-chain DEX with built-in liquidity mechanism and CEX-like functionality, allowing users to easily exchange assets between mainstream blockchains.
Expected timeline.
Gradual but no exact date
"The first phase of private beta is July to August, with unlimited liquidity in September."
Top 7 trends for the future
Protocols' native stablecoins are on a growth trend
You may be surprised to know why I included Shiba in the analysis?
Interestingly, Shiba has been building a full DeFi ecosystem around their Shiba brand, including their own L2 blockchain, Shibaswap, Metaverse, and their own stablecoin, SHI.
Shiba is not alone in its "stablecoin ambitions". After the recent launch of stablecoins on NEAR, Tron, and Waves blockchains, DeFi protocols Aave and Curve are also planning to launch their own stablecoins.
7 Future Trends in DeFi from 25 DeFi Protocols Curve is also launching a stablecoin, Curve USD, and while there is little official information, Aave has already revealed the launch of its new stablecoin, GHO.
The protocol-owned stablecoin (POSC) adds a new revenue stream to the protocol, bringing more use cases to the token, increasing its demand and improving revenue for liquidity providers.
If POSC is widely adopted, it should attract more funding for the protocol. 2.
Increased adoption of veTokenomics
Curve pioneered the so-called veTokenomics, where token holders pledge their tokens over a period of time in order to generate higher returns for themselves and vote on liquidity mining allocations.
More projects are now choosing veTokenomics.
Yearn Finance is expected to launch veYFI in mid-August with a 4-year lock-up period. locked tokens will not be transferable. Synthetix will use the veSNX meter for inflation weighting. Pancakeswap will also launch vCAKE for reward weighting voting "soon". I wouldn't be surprised if Compound Finance also transitions to veTokenomics in the future, as they have stopped liquidity mining altogether.
Finally, it's worth noting that veTokenomics has also attracted aggregator protocols such as Convex for Curve and Aura Finance for Balancer. we can expect such aggregator protocols to be launched for veSNX, veYFI and vCAKE as well.
focus on progressive decentralization
In 2020, top venture capitalist a16z wrote an influential Guide to Progressive Decentralization for crypto applications, which remains important today.
As projects launch products that increase market fit, financial sustainability, engaged communities and regulatory compliance, they should seek to reduce single points of failure - centralize.
From 25 DeFi protocols, a look at 7 future trends in DeFi In this spirit, many protocols have announced clear roadmaps.
dYdX announced V4, with the vision of becoming a fully decentralized protocol. It includes a fully decentralized off-chain order book and matching system. The Graph is working to "decentralize hosting", which will migrate all centralized hosting services to a decentralized network. The migration is expected to take place in the first quarter of 2023. Ren is gradually decentralizing RenChain as it is currently largely centralized. Lido's vote does not limit the amount of pledged ETH, but plans to decentralize by using distributed node technology. Maker's ambition for decentralization is evident through the recent elimination of the "board" vote and the announcement of the "endgame plan". The proposal includes the creation of MetaDAO (subparts of MakerDAO, each managed by its own token). 4. Introducing a new iterative upgrade protocol
Cryptocurrencies and DeFi are evolving rapidly. Projects either adapt to changes quickly or fall behind.
To keep up with the fast-paced market, some protocols are about to make major upgrades to their protocols.
In no particular order.
Synthetix V3 will allow the freedom to create synthetic assets, move to veSNX meters and time locks, and differentiated debt pools are used to provide collateral to and collect fees from specific asset pools without touching each asset. Compound Finance will launch Compound III with a single borrowable asset, etc., as collateral. Nexus V2 will allow the creation of Syndicates (managed underwriting funds) on top of a common infrastructure. dYdX will develop a standalone blockchain based on Cosmos SDK and Tendermint PoS consensus protocol. SuShi 2.0 (mostly deployed) is already a hybrid exchange with a range of innovative cryptocurrency Lego protocols, and NFT marketplace Sōyu is about to launch. Yearn V3 will launch around mid-September, with greater security, flexibility and a new token economy model. Rocket Pool is quietly building at least 3 massively scalable solutions to increase pledged ETH. GMX is committed to X4 protocol controlled exchanges, PvP AMM and supports trading any asset with a Chainlink prophecy machine. 5. The future is multi-chain
This is so obvious that even Compound has a multi-chain strategy for its Compound III.
However, it is no longer competitive to simply deploy on multiple chains.