Web3 and the Future of Decentralized Finance (DeFi)

On April 12th, during the roundtable discussion on the evolution of Web1 to Web3 at the 2023 Hong Kong Web3 Carnival, Dragonfly founder Feng Bo stated that it is still in the early stages of Web3 development, and the best applications are Bitcoin and Ethereum. Once DeFi is as convenient to use as a microwave and refrigerator, it will become the most important financial tool for future human civilization, and we are experiencing tremendous progress in human civilization.

Dragonfly founder Feng Bo: DeFi will become the most important financial tool for future human civilization

On April 12th, during the roundtable discussion on the evolution of Web1 to Web3 at the 2023 Hong Kong Web3 Carnival, Dragonfly founder Feng Bo stated that it is still in the early stages of Web3 development, and the best applications are Bitcoin and Ethereum. Once DeFi is as convenient to use as a microwave and refrigerator, it will become the most important financial tool for future human civilization, and we are experiencing tremendous progress in human civilization. In this article, we will explore what Web3 is and how it’s paving the way for decentralized finance (DeFi).

What is Web3?

Web1, also known as the “Static Web,” was the first version of the internet in the 1990s, where users could only view static content without much interactivity. Web2, also known as the “Social Web,” emerged in the mid-2000s with platforms like Facebook and Twitter, which allowed users to interact with each other and create and share content. Web3, also known as the “Decentralized Web,” is the next version of the internet that’s built on blockchain technology.
Web3 enables decentralized applications (dApps) that can run on a peer-to-peer network without the need for intermediaries or centralized servers. In Web3, users own their data and have control over their digital identities, which provides more privacy and security.

The Evolution of DeFi

Decentralized finance (DeFi) is a subset of Web3 that allows for the creation of financial products and services without relying on traditional financial intermediaries like banks or insurance companies. DeFi is built on blockchain technology and smart contracts that enable transactions to occur automatically and securely without the need for third-party intermediaries.
DeFi is still in its early stages, but it’s growing rapidly. In 2022, the total value locked (TVL) in DeFi projects reached $1 billion for the first time. By 2023, TVL had increased to $10 billion. DeFi applications offer many benefits over traditional finance, including lower fees and faster transaction times.

Challenges and Opportunities of DeFi

DeFi faces several challenges, including regulatory issues and the risk of smart contract vulnerabilities. However, the opportunities for DeFi are vast, including greater financial inclusion and access, the automation of financial services, and more efficient capital markets.
Once DeFi is as convenient to use as a microwave and refrigerator, it has the potential to become the most important financial tool for future human civilization. It could provide the infrastructure for a new financial system that’s more transparent, equitable, and secure than the current system.

The Future of Web3 and DeFi

Web3 and DeFi are still in their early stages, but the progress being made is significant. In the future, we can expect to see more DeFi projects emerge, and Web3 technologies will continue to improve.
As DeFi grows, it will become increasingly important to ensure that the technology is accessible to everyone. This means addressing issues of usability and making DeFi more user-friendly.
Overall, the evolution of Web3 to Web3 and the growth of DeFi are transforming the way we think about finance and the internet. We are experiencing tremendous progress in human civilization, and Web3 and DeFi are at the forefront of this transformation.

FAQs

1. What is the difference between Web2 and Web3?
Web2 is the “Social Web,” where users can interact with each other and create and share content. Web3 is the “Decentralized Web” built on blockchain technology that enables decentralized applications (dApps) that can run on a peer-to-peer network without the need for intermediaries or centralized servers.
2. What are the benefits of DeFi?
DeFi offers many benefits over traditional finance, including lower fees, faster transaction times, greater financial inclusion and access, and more efficient capital markets.
3. Are there any risks associated with DeFi?
DeFi faces risks associated with regulatory issues and smart contract vulnerabilities, but these risks are being addressed, and the potential benefits are significant.