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For the blockchain sector, 2020 was the year of decentralized finance. While the rest of the world was gripped by fears of Covid, blockchain caught the bug of decentralized finance, with crypto enthusiasts feverishly “fomo-ing” on lending protocols, borrowing stablecoins and mining liquidity. DeFi, for short, dominated the conversation for the greater part of the year, building momentum in February as the Total Volume Locked (TVL) in the sector first surpassed $1 billion. The figure, which represents the dollar value of assets locked in DeFi protocols, closed out the year above $13 billion, demonstrating 2,000% growth since January.
The TVL is just one indicator that DeFi had a landmark year. Looking back at some of the big trends of 2020 offers clues as to what comes next and what trends may dominate blockchain in 2021.
The role of Ethereum
The Ethereum network must be part of any conversation about DeFi. Ethereum supported the DeFi sector almost single-handedly in 2020, with the cracks showing for much of it. Transaction times slowed considerably, while average fees rocketed from a few cents at the start of the