Decentralized finance (DeFi) has seen massive growth in 2021, with the total value of cryptocurrency locked in DeFi protocols growing nearly 800% over the year. While user growth has been massive, infrastructure shortcomings that will limit the future growth have presented themselves. Though strides have been made to bolster post-trade infrastructure, pre-trade has been largely ignored, according to two new research reports published today by Burton-Taylor International Consulting.
The report says that the new market data initiatives from major players in the traditional finance landscape, headlined by the April 2021 inception of the Pyth Network, will further the ability of DeFi to mirror the capabilities of traditional finance.
Burton-Taylor Publishes Report On DeFi Market Data Space
Burton-Taylor today released two new reports covering the DeFi market data space. The Pre-Trade Infrastructure in DeFi: An Opportunity for a New Form of Data Provision report analyzes the current gaps in decentralized finance market data capabilities and how its impacting on-chain applications. The Market Data in DeFi: Will the Pyth Network Bridge the Pre-Trade Infrastructure Gap? report analyzes the process by which real-world data is delivered to the blockchain, while introducing the Pyth Network as a possible solution to DeFi’s market data issues.
Key findings of the report include:
- The lack of quality pre-trade data in DeFi has presented major risk, valuation, and security issues for DeFi investors. Limited access to quality data has resulted in heightened volatility, execution hesitancy, and inadequate risk management procedures.
- DeFi has developed a ‘centralization problem,’ with many of its more complex operations relying on centralized data providers for operation due to a lack of quality decentralized offerings.
- Contributing to the DeFi ecosystem through infrastructure provision has allowed institutions to gain access to the space while limiting associated transactional risks.
- The Pyth Network has posed a new alternative to traditional market data provisioning, self-aggregating trade data for sale through a decentralized platform.
Sean Eskildsen, analyst at Burton-Taylor, said:
“The rapid growth of DeFi has led to some inevitable growing pains. A lack of reliable pre-trade infrastructure is going to prevent any sophisticated trader from entering the space and transacting. New market data solutions like Pyth will be essential in making DeFi the viable alternative to traditional finance it aims to become,” he added.
Burton-Taylor International Consulting offers information industry market research, strategy and business consulting. Burton-Taylor Exchange, Credit, Risk, Compliance, Media Intelligence, PR and Market Data share figures are seen as industry benchmark standard globally.
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