The Prospects of DeFi Development and Social Trading Potential after the Ethereum London Upgrade

Ethereum successfully completed the London upgrade at block height 12,965,000 on the evening of August 5, 2021, and proposals such as EIP-1559 officially took effect. As of the morning of August 11, over 20,000 ETH have been burned, worth over 60 million dollars. Platforms such as OpenSea, a certain DEX, and Axie Infinity contributed the majority of the burned share, reflecting the high trading activity on Ethereum.

The prosperity of Ethereum also reflects the vigorous development of DeFi. The DeFi market, especially the segments involving exchange operations, is experiencing exponential growth. According to statistics, the number of Ethereum DeFi users approached 1.7 million in the first quarter of 2021, a 50% increase since January 1. As crypto assets are gradually accepted by more investors, the influx of funds and user numbers into the DeFi market is expected to continue to rise.

However, the current development of DeFi also faces some challenges. The main manifestations are:

1. The evaluation criteria are singular. Currently, the development of DeFi is mainly measured by data such as TVL and trading volume, which makes it difficult to comprehensively reflect the actual situation.

2. User activity statistics may be inflated. An active user may have multiple addresses, leading to an overestimation of the actual number of users.

3. The proportion of large holders is too high. A small number of whales contribute a significant amount of TVL, which does not accurately reflect the participation of ordinary users.

4. User participation is singular. Most users only engage in simple operations of "mining-withdrawal-sale", lacking deeper involvement.

5. High yields are difficult to sustain. The model of attracting users through high APY is hard to maintain in the long term.

In order to promote the further development of DeFi, social functions may become an important breakthrough. Drawing on the experiences of the Web 2.0 era, social attributes are often key factors in igniting the ecosystem and achieving user growth.

Specifically, introducing social trading features in the DeFi space can bring the following benefits:

1. Meet users' communication needs. Users can share trading strategies, discuss market trends, and more.

2. Enhance user engagement. Social interaction can increase user activity and retention rates.

3. Provide more value. In addition to trading, users can also gain diversified value such as information and building relationships.

4. Attract new users. Lower the entry barrier to make it easier for newcomers to access and understand Decentralized Finance.

5. Promote ecological development. Social features can empower other businesses of the DeFi platform by driving traffic.

In the future, DeFi platforms may consider building a decentralized "small group" social ecosystem, allowing users to not only trade but also engage in on-chain communication, data analysis, and more. This is expected to make the DeFi ecosystem richer and more diverse, promoting the industry towards a new stage of development.