Review of Binance's DeFi Research: Successfully Predicting the Rise of USDT, WBTC, and the End of Maker's Dominance

Binance Research, a research division under the Binance cryptocurrency exchange, collaborated with DApp.Review in January of this year to co-author a DeFi research report. In the blink of an eye, the cryptocurrency market experienced a roller-coaster first half of the year, yet Binance's DeFi report accurately predicted several major development trends. This article will take you through a review of these predictions.

Centralized Representative - USDT Enters the DeFi Field

With the mainstream US dollar stablecoin USDT moving to the Ethereum network last year, Binance pointed out at the time that USDT was expected to expand into the DeFi field in 2020.

The report is very optimistic about the development of decentralized lending platforms and uses Compound as an example, suggesting that this protocol may introduce USDT this year. Previous reports indicated that Compound did indeed propose to "Add Support for USDT" on April 27.

In addition, DeFi protocols such as Lendf.Me, Aave, yearn, Curve, and DDEX are gradually integrating USDT, significantly increasing the natural flow of their protocols through this dominant stablecoin in the form of the US dollar.

Bitcoin as Collateral Option

As DApps decline and DeFi began to emerge last year, Binance believes that as the ecosystem gradually grows, "Alt-DeFi" will also expand, meaning that the synergistic effect of other blockchains with Ethereum will strengthen the development of DeFi, especially Bitcoin. The report indicates:

Bitcoin may play a more important role in DeFi, whether on Ethereum or as an independent solution. As the largest cryptocurrency by market capitalization, Bitcoin may become collateral in MakerDAO, such as tBTC and WBTC, and be adopted in DeFi.

As predicted in the report, MakerDAO added WBTC as a collateral option in early May, resulting in a significant increase in demand, with the locked-in value continuously reaching new historical highs, with approximately 6,148 WBTC locked in DeFi at the time of writing.

The End of Maker's Dominance

In fact, the landscape of total locked-in value in DeFi has already changed in 2019. The report indicates that in January of this year, Maker accounted for about 50%, a significant decrease from over 90% at the beginning of 2019, with the leading challenger being lending platform Compound.

In addition to introducing USDT to drive user growth, Compound has dominated the DeFi market in terms of volume, market capitalization, and total locked-in value since the introduction of the governance token COMP, replacing MakerDAO's long-held dominant position. Reports have been ongoing since Compound announced the launch of the COMP token.

Although Binance also points out that there are still some imperfections in the report, such as asset management platforms like Set Protocol and Melon, as well as decentralized trading protocols like Loopring not being discussed in the content.

However, overall, the performance of DeFi so far has been amazing. The sharp drop in March triggered a significant liquidation of MakerDAO's stablecoin DAI, causing a crisis in the DeFi ecosystem. But after three months, not only did it return strongly, the total locked-in value also surpassed historical highs, as if the black history of March had never occurred. Binance Research also believes that once technical and regulatory challenges are overcome, the DeFi sector is expected to experience another large-scale development.