The final quarter of 2023 is turning out to be unexpectedly pleasant for many investors in the cryptocurrency market. The year, which is coming to an end, was relatively quiet for the DeFi sector, but this could soon change. The upcoming year is already being discussed as a turning point for DeFi, with positive developments and maturing trends in the crypto market.
Julian Deschler, co-founder of the Web3 privacy protocol Elusiv, is among the leaders optimistic about the near-term prospects of the DeFi space. Deschler anticipates a resurgence of constructive growth in the DeFi ecosystem, highlighting projects that have shown real value and scalability over the past few years. He sees 2024 as the year that will catalyze legitimate traction for DeFi and mark the beginning of mainstream adoption in the long term.
Kain Warwick, founder of the futures market platform Synthetix, echoes these sentiments, stating that 2024 could signal the end of the bear market. Warwick notes the impressive price momentum seen in the last quarter and expects it to continue as macro liquidity issues are resolved throughout the year.
Adding to the positive outlook for DeFi, Sam MacPherson, co-founder of Phoenix Labs and contributor to MakerDAO’s subDAO Spark, sees strong evidence of an emerging bull trend. MacPherson, who has been monitoring Maker’s balance sheet for five years, believes a bull market is imminent and will likely take place in 2024.
One area likely to witness significant changes is legal regulations. The crypto market, especially in the United States, has continued to experience conflicts with lawmakers throughout 2023. It appears that the DeFi sector will not be able to avoid scrutiny in the coming year.
Nathan Catania, a partner at XReg Consulting, specializing in public policy and legal regulatory advice for the crypto market, suggests that true DeFi projects should fear central alternatives less. He points out that most DeFi projects have some central control elements and are actually part of a spectrum between centralized finance (CeFi) and DeFi, known as hybrid finance (HyFi). In 2024, real DeFi is expected to remain outside the scope of current regulatory paradigms, while regulators, including those in the US, will likely apply pressure on HyFi.