New Trends in DeFi Development After the Ethereum London Upgrade

On the evening of August 5, 2021, Ethereum completed the London upgrade at block height 12,965,000, successfully implementing proposals such as EIP-1559, and launched the token burn mechanism of Ethereum.

As of the morning of August 11, over 20,000 ETH have been burned, worth more than 60 million USD. Most of the burned shares come from several major applications, reflecting the enormous trading volume on Ethereum.

The prosperity of Ethereum is also a strong testament to the high development of DeFi. The DeFi market is experiencing exponential growth, especially in business segments such as "SWAP" and "DEX". In the first quarter of 2021, the number of Ethereum DeFi users reached nearly 1.7 million, an increase of 50% compared to January 1. As crypto assets are gradually accepted by more investors, the funds and number of users flowing into the DeFi market are expected to continue to grow.

However, the current momentum for DeFi growth still appears insufficient. Existing metrics such as TVL and trading volume are relatively singular and do not fully reflect the true development status of DeFi. Many data points contain discrepancies, such as the number of active addresses possibly being double counted, and the increase in TVL may stem from rising coin prices rather than actual asset growth. For ordinary investors, the forms of participation in DeFi are also relatively singular.

Social attributes may be the catalyst for a qualitative change in DeFi. The development from Web 1.0 to Web 2.0 shows that the introduction of social functions has brought a qualitative leap to the internet ecosystem. Currently, DeFi products can only meet users' individual trading and financial needs, and have not yet facilitated communication and interaction among users.

The future development direction of DeFi may be to build a "social trading" ecosystem. By deeply connecting users through social functions, it enables information sharing and interaction, injecting new vitality into DeFi. This model may take the form of "small groups," allowing users to engage in on-chain communication, data analysis, and more while trading, making the DeFi ecosystem richer and more diverse.

Overall, social trading is expected to become a new breakthrough for DeFi. It can meet users' needs for investment advice and information while improving the transparency of trading. Combined with new technologies such as cross-chain trading, social trading will bring more possibilities to DeFi, driving the entire industry towards a new stage of development.