Decentralized finance (Challenge) is growing, as the industry adapts to changing market conditions and technological capabilities.
After significant volatility in recent years, DeFi’s market share in cryptocurrency trading increased from 0.33% in 2020 to 11.91% in 2024, according to researchers at crypto platform Gate.io.
Talk to DecryptGate.io researchers highlighted increasing regulatory clarity, layer 2 solutions, innovative protocols, institutional interest, and global economic instability as key drivers of renewed interest in DeFi. They also highlighted the importance of 2020’s “DeFi Summer” as a learning experience, arguing that the industry should focus on “real-world utility and robust infrastructure” rather than speculative gains.
Evolution of the DeFi platform and infrastructure
According to Gate.io researchers, the trading platform landscape has evolved significantly since the “DeFi Summer” of 2020. This period was marked by unprecedented growth in liquidity mining and yield farming, with projects like Compound introducing innovative token distribution mechanisms that have sparked widespread participation in DeFi protocols.
Today, the $120 billion industry’s total value locked (TVL) represents 3.5% of the total crypto market capitalization, with established protocols demonstrating sustained usage. The researchers also pointed out that the success of decentralized platforms stands in stark contrast to other Web3 applications, while DEX process billions of dollars in volume, major metaverse Platforms like Decentraland and The Sandbox are struggling to maintain even a few thousand daily active users, compared to traditional gaming platform Roblox’s 80 million.
As the DeFi ecosystem has matured, established exchanges have evolved to bridge the gap between centralized and decentralized finance. Gate.io has grown from a traditional cryptocurrency exchange established in 2013 to a comprehensive platform integrating DeFi functionality.
Through its Gate Web3 platform, users can access decentralized services, including token swaps and cross-chain transfers, while maintaining the security benefits of a centralized infrastructure. The platform further facilitates participation in DeFi through Gate Startup, which helps launch and incubate new blockchain projects, thereby contributing to the growth of the ecosystem.
Innovation and security
The evolution of DeFi technology has also led to significant improvements in security infrastructure, the researchers reported, with a dramatic drop in successful exploits over the past year driven by deeper audits of smart contracts and to improved security practices. Platforms are increasingly implementing comprehensive security measures to protect user assets while maintaining the accessibility that makes DeFi attractive.
Gate.io exemplifies this industry-wide focus on combining innovation and security. Its 100% proof of reserves system uses open source Merkle tree solutions combined with third-party audits, allowing users to independently verify deposited assets. The platform’s Gate SAFU (Secure Asset Fund for Users) also provides additional protection through transaction fee revenue, while multi-layered safeguards protect users during login, transactions and withdrawals. These security features work alongside the platform’s technical capabilities, including cross-chain transfers and dapp integration, to create a secure environment for DeFi activities.
This focus on security also extends to Gate.io’s trading infrastructure, where automated systems monitor suspicious activity while maintaining efficient transaction processing. The platform’s approach reflects the DeFi sector’s broader movement toward combining robust security measures with technological advancements, meeting two key requirements for widespread adoption.
Strategic investment and real-world asset integration
Gate Labs actively supports DeFi innovation, with recent investments including Pencils Protocol, which focuses on auction and yield aggregation services for blockchain-native and real-world assets (RWA). The investment supports security auditing, community development and technical infrastructure, integrating zero-knowledge technology onto the Scroll network.
This RWA integration represents a growing area of interest: most banks continue to rely on the 50-year-old SWIFT system for international transfers, with minimal innovation in core infrastructure. While traditional banks maintain expensive back offices and restricted operating hours, DeFi protocols can process transactions 24/7 with minimal overhead, creating opportunities for platforms bridging centralized finance and decentralized.
Future outlook
Recent data shows growing comfort with decentralized trading, with the DEX/CEX spot trading volume ratio increasing from less than 10% in 2023 to 13.92% in 2024, the researchers reported. This growth has been particularly strong in long-tail assets and new token launches, where the permissionless nature of DEXs provides significant advantages over centralized platforms. The rapid emergence of layer 2 solutions has also boosted their adoption by reducing transaction costs and improving processing speeds, making DeFi more accessible to mainstream users.
With market analysts predicting that DeFi’s market share could reach 10% within two years, crypto platforms such as Gate.io are poised to meet the growing demand, by developing commercial infrastructure, Web3 capabilities, educational resources and investments in emerging protocols.
Disclaimer
The content presented here does not constitute an offer, solicitation or recommendation. You should always seek independent professional advice before making any investment decision. Please note that Gate.io may restrict or prohibit the use of some or all of the Services from restricted locations. For more information, please read the Terms of Service via https://www.gate.io/user-agreement.
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