ABU DHABI: Decentralised Finance (DeFi) market is expected to expand at a compound annual growth rate (CAGR) of 46.0 percent from 2023 to 2030, with Total Value Locked (TVL) increasing to nearly $97 billion in Q1 2024, reflecting an 81 percent rise.
This growth is no surprise, as DeFi is transforming the traditional finance ecosystem with an inclusive, accessible, and transparent approach, leading to a dramatic surge in DeFi protocols. AIM Congress looks to discuss this emerging trend in finance under digital finance and fintech innovations.
Built on blockchain technology, transactions in Decentralised Finance (DeFi) sector takes place without any centralised financial institutions, and are managed by coded agreements designed to automatically execute a set of instructions known as smart contracts, ensuring transparency and security.
Vitalik Buterin first proposed the expansion of cryptocurrencies beyond simple transactions in 2013, and introduced the concept of smart contracts in the Ethereum white paper as an aid for developing decentralised apps (dApps). Ethereum, thus, inaugurated the decentralised finance movement hosting majority of dApps and dominating the DeFi sector with a market share of 54 percent. It is worth noting that the first version of Ethereum relied on energy-intensive Proof-of-Work (PoW) consensus model resulting in high carbon footprint. The upgraded version, Ethereum 2.0 relies on a Proof-of-Stake (PoS) consensus model reducing its emissions by 99.9 percent.
DeFi transforms the traditional finance ecosystem by eliminating the need for intermediaries and allowing users to engage in transactions directly, reducing costs making financial services affordable and helping speed up the entire process. DeFi also increases transparency among its users through platforms that record transactions on public blockchains, allowing users in the network to understand the kinds of transactions taking place together with the smart contract’s code and functionality. Not to mention, these platforms are not limited by geographical boundaries, hence, users from different regions can participate in global finance seamlessly.
Furthermore, DeFi facilitates the tokenisation of real-world assets (RWAs) such as real estate, providing users with multifaceted advantages like liquidity boost, fractional ownership, transparency, and inclusivity. The movement of tokenised assets through DeFi channels paves the way for new markets and financial instruments, bringing fresh opportunities to existing investors alongside attracting new participants, and enhancing the overall stability and growth potential of the financial ecosystem.
It is worth noting that the world’s largest cryptocurrency topped $87,000 for the first time on Monday. As of around 3:45 p.m. ET, bitcoin’s price stood at $87,083, per CoinDesk, up over 28 percent in the last week alone — which is part of a rally across cryptocurrencies and crypto-related investments since Trump won the US presidential election last week.
As the DeFi landscape evolves, it aligns with broader trends in the financial sector, emphasising the need for innovation and adaptation, which is particularly relevant in light of the upcoming 14th edition of AIM Congress, set to take place from April 7 to 9, 2025, in Abu Dhabi.
A key highlight of AIM Congress 2025 will be the ‘Future of Finance’ portfolio, focusing on the theme ‘Adapting & Adopting: The Roadmap to the Future of the Digitalisation of the Finance’.
This portfolio, featuring a range of interactive activities such as exhibitions, panel discussions, keynote addresses, workshops, and bilateral meetings, intends to connect professionals across the financial sector, providing opportunities to share expertise and discuss best practices in financial innovations like DeFi for a better tomorrow in global finance.
As DeFi matures, there’s a growing recognition of the potential for its integration with traditional financial systems. Anchored by Ethereum 2.0’s flexibility and enhancements, DeFi movement not only seeks to challenge traditional financial system but also offers a more transparent, efficient, and inclusive alternative.
AIM Congress 2025, an initiative of the AIM Global Foundation, is set to offer a wide range of activities, including events, forums, dialogue sessions, workshops, high-level meetings, the AIM Investment Awards and Exhibition, a startups competition, and showcases country-specific investment opportunities, highlighting eight key portfolios: Foreign Direct Investment (FDI), Global Trade, Startups and Unicorns, Future Cities, Future Finance, Global Manufacturing, Digital Economy, and Entrepreneurs.
