For months, the fragmented financial sector (Defi) has been the coordinator of an important stock market bear market, so much so that the total amount locked in this sector has gradually fallen from a historical high of $150 billion (completed in May 2022) to slightly above the current level of $50 billion.

Even so, because FTX went bankrupt along with other famous physical lines such as Celsius, Genesis and Vauld-trading volumes on many platforms doubled in November 2022 alone, and the amount of money injected into the sector from the "centralized" approach is still increasing. It is worth mentioning that in the recent market ups and downs, many scattered trading centers and online loan platforms operate safely again, especially compared with the same industry in the middle.

Therefore, in order to make DEFI really play a greater development potential, the industry needs to carry out important transformation and development. Because many agreements operating in this field have been providing consumers with unsustainable benefits for too long. In addition, with recent soaring annual interest rates and inflation-and the so-called "risk-free" return on six-month bonds exceeding 5%-investors' interest in diversified options seems to have waned.

In fact, even the changing macroeconomic situation has affected DEFI, with a variety of well-developed projects and major changes to the salary structure in order to maintain competitiveness. MakerDAO, for example, recently voted to increase its DAI (DAI) savings rate tenfold to 1 per cent.

How can Defi finally gain consumer confidence?

According to Hawamdeh Ajaja, CEO of Alliance Block founder, Defi, like all international markets, is facing a cycle at this stage. Alliance Block is a decentralized infrastructure service platform that connects traditional financial institutions with Web3 applications. While the events of Terra, Celsius, Three Arrow Capital and FTX have undoubtedly shaken investors' confidence, the difficulty lies in the participants operating in the market, not the technology itself. He told Cointelegraph:

To support and maintain customer confidence, Defi must focus on Value for Users and protect their solutions. This means focusing on compliant Defi solutions, identity management, database encryption, customer data ownership, and untrusted KYC program processes.

"this can symbolize real world assets and financial derivatives, thereby attracting more cash flows into DEFI, including cash flows from traditional participants and institutions that attach great importance to compliance management and sustainable development," he added.

Similarly, Warren Kumar, founder and CEO of the decentralized exchange Hashflow, told Cointelegraph that at this stage, the unpopular industry needs stronger goods that can solve real-world problems. "the Defi ecosystem is still in the exploratory stage, and many projects are still exploring the match of their respective sales markets," he said.

However, Kumar claimed that while there is a direct link between consumer confidence and the decline in dollar trading volume, the most important thing is to take external factors into account. For example, the Defi trend of 2021 emerged in a strong macroeconomic situation, which will have a profound impact on the sector:

This kind of sustained growth is a very good Kickstarter for this area and creates a lot of opportunities. However, the situation is different now, the sales volume is much lower, and the business operation model and target groups have been restructured. Good quality will always win, and customer confidence will follow.

Juana Attieh, co-founder and chief product officer of Fluus, told Cointelegraph,Defi that the decline and lack of recognition was mainly due to the repeated abuse of power and exploitation of customers by the centralized entity line. Fluus is an enterprise with data encryption steep slope Internet fiber line to login password gateway ip convergence enterprise.

In her view, in order to repair market sentiment, DEFI participants must give priority to improving clarity and setting standards to share information about relevant underlying assets, agreements, governance models, and so on.

"Security measures must be greatly improved to protect customer assets and information. This may include conducting the necessary financial audits, performing system vulnerability rewards, and other countermeasures to ensure the security of the Defi agreement.

Attieh further felt that it was particularly important for the department to work closely with due process to control picture quality and to develop a governance framework that could reduce uncertainty and uncertainty by repairing self-confidence.

Not everything looks bad.

Even though the sales market is facing a period of quiet at this stage, Johnson Steiger, senior vice president of Fuse growth, the Web3 payment ecosystem for distributed books, told Cointelegraph,Defi (especially market-making applications based on automated technology) as if they had found a very successful product sales market match in the last indigenous innovation cycle. He said:

"despite the marked decline, there is still $50 billion in liquidity to break the agreement, which is exciting and unprecedented in the investment community. In the investment community, people often need to rely on the organization of market-making and borrowers as metal catalysts to make economic development work again. "

Steiger acknowledges that only with the improvement of customer experience can consumer confidence and demand be improved. He added: "even as a senior login password professional, it is still difficult to apply well-known Defi applications, so I can't imagine how difficult it is for an open bank."

CEOAndy Ku of Altava Group, the digital product Web3 ecosystem, feels that sometimes things have to get worse and worse before they can become more stable. He told Cointelegraph that in the past, embarrassed artists loosely used the word Defi to promote more or less completely centralized channels.

However, he believes that most of today's high-quality Defi projects are firmly rooted in the spirit of transparency, and more and more of these projects are conducting smart contract financial audits and publishing reserve confirmation reports, which can help restore people's self-confidence in this area.

"the growing mistrust of traditional financial institutions is the result of the rise of DEFI. Today's balanced behavior is how to evolve Defi into a more transparent, regulated and responsible organization.

Where is the future of Defi?

Learning from the various high-profile scandals of 2022, Ajaja feels that the next wave of Defi will put more emphasis on compliance management and user experience. In this regard, she points out that more and more projects have focused on providing compliance Defi solutions that enable Trustless to master your users and your sale and purchase agreements, which is the key to the long-term selection of traditional industries.

In addition, the definition of self-service escrow is becoming more and more critical in the minds of many users, and more and more Defi projects focus on self-service escrow wallet solutions that enable them to control and own their own property and information. This wallet makes it easier and easier to manage and repair property, store encrypted digital identities and verifiable credentials, giving users good control over how they share this information.

Attieh believes that while a bear market in the stock market may reduce the use of some Defi projects, especially as investors become more and more risk-averse, the most stable projects are likely to grow rapidly again and gain momentum, even in challenging economic strength, with strong stock fundamentals and real-world test cases.

To some extent, Toni Fogg, president and chief strategy officer of IOVLabs, told Cointelegraph that a proactive result of the ongoing login password winter showed that it reduced the white noise that surrounds the ecosystem, adding: Rootstock is a blockchain intelligent contract service platform acquired by the BTC Internet.

You can see a lot of contractors, lower buzzwords. In order for Defi units to cross the gap, building a login password project team must focus on accessibility, usability, and security. We should make problem-solving goods for real people-pay bills, remit money to key members of overseas families, protect them from uncontrollable inflation, and look for empty places to save.

Therefore, with the future development driven by blockchain technology, it is undoubtedly interesting to see how to continue to improve the rapid development of decentralized finance, especially now more and more people are exploring the inability to use intermediaries.