Introduction: The Renaissance of DeFi and New Opportunities
Decentralized Finance (DeFi) experienced a strong rebound in 2024 after several years of stagnation, ushering in technological advancements, restored market confidence, and a more favorable regulatory environment. As the DeFi ecosystem continues to mature, its 'bankless' vision is gradually becoming a reality. Looking towards 2025, the development prospects of DeFi are exciting, but to truly realize its potential, a series of key challenges still need to be addressed, along with comprehensive upgrades in technology, user experience, and ecosystem.
1. The Rise of Consumer-Level DeFi
1. The Social Context of De-Banking
In recent years, the concept of 'de-banking' has gradually moved from a niche topic into the mainstream. The views mentioned by Marc Andreessen on the (Joe Rogan Experience) sparked widespread discussion, and many users began sharing their frustrations due to traditional banking limitations. This dissatisfaction with the traditional financial system has driven DeFi to become a potential alternative.
However, despite the significant improvement in DeFi's technological capabilities, its ecosystem has yet to fully meet the everyday financial needs of average consumers. Especially in the areas of payments and consumption, DeFi still needs to address pain points such as complex user experiences and inconvenient payment processes to truly integrate into people's lives.
2. Core Challenges of Payments
A seamless crypto asset consumption experience is a crucial prerequisite for DeFi to become mainstream. In recent years, the crypto payment card market has rapidly developed, evolving from early custodial cards to more advanced non-custodial solutions, gradually approaching a true self-custodied smart contract wallet payment card.
The Four Generations of Payment Card Evolution:
Gen 0 (First Generation): Custodial prepaid cards, where users must first recharge crypto assets to the card account before converting them to fiat currency. These cards essentially serve as 'cash-out' tools for cryptocurrencies, with products including PayPal and Holyheld.
Gen 1 (First Generation): Custodial crypto payment cards that convert fiat in real-time during payment. This method allows users to hold crypto assets until payment, with products including Coinbase, Crypto.com, and Revolut.
Gen 2 (Second Generation): Non-custodial prepaid cards that link directly to non-custodial wallets, but users may not have complete control over private keys and need to recharge manually, with products including Osmosis Pay and Moonwell.
Gen 3 (Third Generation): Self-custodial smart contract wallet payment cards that support flexible DeFi interactions, allowing users to pay directly from smart wallets without frequent recharges, represented by products including Gnosis Pay and Metamask cards.
2. Technical Highlights of Third-Generation Payment Cards
1. Gnosis Pay: Pioneer of Third-Generation Payment Cards
Gnosis Pay is the first third-generation payment card, launched at the 2023 EthCC conference. It transforms users' Gnosis Safes into non-custodial bank accounts, supporting SEPA transfers in euros (EURe) and pounds (GBPe). Its design allows users to pay directly from blockchain addresses while retaining complete control over their funds.
Technological Advantages:
Modular Design: Gnosis Pay Safe is equipped with 'role modules' and 'delay modules', allowing users to set daily spending limits and supported tokens, while the latter sets a 3-minute delay for non-card transactions to enhance security.
Integration with DeFi: Although the delay module limits its direct use in DeFi, users can achieve automatic recharges and earnings management through enhanced tools like the Zeal smart wallet.
Enhanced Features:
The Zeal smart wallet optimizes user experience through its automatic recharge feature, supporting sDAI to earn yields and automatically convert to EURe. This logic opens up possibilities for more DeFi integrations in the future, such as automatic rent and bill payments.
2. Fuse Pay: An Innovative Payment Card Based on Solana
Fuse Pay, built on Solana's Squads protocol, combines Drift and Jupiter to provide yield and exchange functionalities. Its design allows users to directly deposit funds while retaining full custody, avoiding traditional recharge processes. Fuse Pay also plans to integrate with direct deposit features in the U.S. to offer users a more convenient payment experience.
3. EtherFi and Avalanche Cards: A Combination of On-Chain Lending and Payments
EtherFi and Avalanche cards support lending functionalities through on-chain liquidity pools. Users can pay or borrow by staking assets (such as sAVAX and eETH) and use the earnings to repay debts. This flexibility provides new ideas for the future development of DeFi payment cards.
3. Expansion of DeFi Banking Services
1. Core Functions of Crypto Banking Services
To achieve the widespread adoption of DeFi, having payment cards alone is not enough; banking service functionalities such as direct deposits and bill payments are also needed. Currently, Web2 fintech companies like PayPal dominate this field.
Leading Solutions:
PayPal: Offers comprehensive services including direct deposits, bill payments, and virtual debit cards, with its stablecoin PYUSD deployed on Ethereum and Solana. PayPal's services cover the full process from consumption to bill payments, making it the most complete solution currently available.
Robinhood, Cash App, and Revolut: These platforms offer similar functionalities, but there are still deficiencies in bill payments. Revolut has launched a standalone cryptocurrency exchange, Revolut X, and plans to further expand its cryptocurrency services.
2. Coinbase's Strategic Layout
Coinbase offers functions similar to traditional banks, including direct deposits, high-yield USDC savings (5% annualized), and deep integration with DeFi. Recent initiatives include:
Launched cryptocurrency deposit services in collaboration with ApplePay.
Expanding high-yield USDC programs on the Base chain.
4. Future Trends and Opportunities of DeFi
1. Cross-Ecosystem Collaboration
Projects like Harbour are developing more efficient fiat-to-on-chain asset conversion tools, with their flagship product Magic Ramp achieving seamless fiat-to-crypto conversion at a low cost (0.5% fee). Harbour plans to expand to the U.S. and other regions to provide broader services for DeFi users.
2. Full-Stack Crypto Banking Solutions
In the future, a personal finance DeFi stack that combines various crypto payment cards with banking services will become a trend. For example, users can leverage Holyheld's seamless recharge experience combined with Gnosis Pay's smart contract features for comprehensive management from consumption to investment.
3. The Possibilities of a New Generation of Payment Cards
The payment cards from Metamask and Argent enable users to pay directly from their main wallets, eliminating the need for frequent recharges. This innovation reduces operational complexity for users but also increases security risks. If these cards can effectively address security issues, the fourth generation of payment cards may emerge by 2025.
Conclusion: Moving Toward Truly Decentralized Finance
In 2025, the development of DeFi will focus on optimizing consumer experience. From the technological iterations of payment cards to comprehensive coverage of banking services, DeFi is gradually approaching its ultimate goal of being 'bankless'. Although challenges still exist, the drive for technological innovation and market demand will pave the way for a broader future for DeFi.
The future of DeFi is not only about technological advancements but also about its ability to replace traditional financial systems. With further optimization of user experience and continuous improvement of the ecosystem, DeFi is poised to become an important part of the mainstream financial system by 2025.
