New Opportunities for DeFi Development after 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, which introduced a token burning mechanism for Ethereum.

As of the morning of August 11, over 20,000 ETH have been burned, worth more than 60 million USD. A certain NFT trading platform, a certain DEX, a certain game project, and a certain stablecoin project contributed most of the burn volume, reflecting the massive trading scale on Ethereum.

The prosperity of Ethereum also represents the vigorous development of DeFi. The DeFi market is experiencing exponential growth, especially in business areas such as DEX. According to a report from a data analysis agency, there were nearly 1.7 million Ethereum DeFi users in the first quarter of 2021, an increase of 50% compared to the beginning of the year. As crypto assets are accepted by more investors, the DeFi market is expected to attract more users and capital inflow.

However, the development of DeFi also faces some challenges. Currently, DeFi development is mainly measured by a single indicator such as TVL, which makes it difficult to fully reflect user activity and the real situation. Many users have multiple addresses, and large holders contribute a significant amount of TVL, making it difficult for this data to reflect actual tradable assets and user activity. For investors, participation in DeFi mainly involves "mining - withdrawing - selling", and high returns are difficult to sustain.

To promote the further development of DeFi, social functions may be a breakthrough. From the evolution of Web 1.0 to Web 2.0, it is evident that social attributes have played a key role in the explosive growth of the internet ecosystem. The rise of social networks has made users not just passive recipients of information, but also active creators of content and interactors with others.

In the traditional internet field, social interaction has become an important feature of major platforms, enhancing user engagement through the "small group" effect. The DeFi sector can also draw on this model, using social functions to meet users' needs for communication and sharing, injecting new vitality into the ecosystem.

Build a decentralized social trading ecosystem that allows users to not only trade but also engage in on-chain communication and data analysis, providing support for trading decisions and potentially pushing DeFi towards a new stage of development. By transparently displaying investment views and behaviors, it meets users' demand for reliable investment information.

In the future, DeFi platforms may consider introducing two roles: investment managers and ordinary users. Investment managers publish investment portfolios, and users can choose to follow investments and enjoy dividends. At the same time, basic infrastructure such as trading, data analysis, community governance, and cross-chain capabilities will be provided to achieve multi-chain asset management. Operations will be ensured to be transparent and decentralized through smart contracts.

As users' acceptance of blockchain products increases, the integration of trading and social interactions will bring new development opportunities and user experiences to Decentralized Finance.