Decentralized Finance (DeFi) players have been left unscathed as the unmonitored control of off-chain capital of centralized crypto entities led to misdeeds and bad trades, and subsequent collapses.

Be it multi-billion dollar bankruptcies, fraud allegations, rampant scandals, or plunging crypto-asset prices, 2022 was characterized by tragic events, culminating mostly from CeFis, which, in turn, enhanced the value proposition of DeFi.

The decentralization-first purist approach is yet to take hold in the industry whose inception itself was inspired by the distrust in centralized financial pillars. But as the broader industry climbs out of the harshest crypto winter, DeFi is, slowly but steadily, shedding its repute as an unsustainable idealism. Let’s dive in to assess the opportunities, bottlenecks, and compliance in this sector this year.

Real World Using DeFi

A push towards real-world assets marks a unification of traditional finance and DeFi, which has paved the way for a multi-trillion dollar credit market to the decentralized finance ecosystem. Such an integration leans into the strengths of both sectors.

Recently, a private-equity firm Hamilton Lane teamed up with digital asset issuance firm Securitize in a bid to tokenize a portion of its $2.1 billion flagship equity fund on the Polygon network. In yet another case, Singapore’s central bank, MAS, unveiled Project Guardian, a pilot program to tokenize bonds and deposits that can be used in numerous DeFi strategies.

Similarly, a Philadelphia-based Huntingdon Valley Bank partnered with MakerDAO, following which the protocol connected its native stablecoin DAI to traditional finance. This marked the first commercial loan participation between a US-regulated financial institution and a decentralized asset.

The inclusion of real-world assets in the DeFi industry ramps up the liquidity available while offering a novel asset class for DeFi participants to leverage for investment yield. One of the major catalysts fueling this trend is less exposure of the investment yield to crypto volatility and serving businesses and customers who are not c