The recent events in the crypto markets have reaffirmed the value proposition of decentralized finance (DeFi) as one of the core building blocks of the future of digital assets. However, the DeFi space has also been impacted by the changes in the market because many of the top participants in DeFi have effectively disappeared. This combination of events creates a very strong friction for the future of DeFi. In some ways, the challenges with centralized financial (CeFi) institutions should favor the adoption of DeFi protocols. On the other hand, the fundamental market conditions that triggered the recent DeFi summer are not present anymore. While we can all agree that DeFi should be a key component of the next phase of the crypto market, the specifics are far from trivial and, most likely, will require significant changes in the industry.
