It may only be April, but it has already been a fairly eventful year for crypto. 

In January, the United Securities and Exchange Commission (SEC) begrudgingly approved spot Bitcoin ( BTC ) exchange-traded funds (ETFs), while the fourth Bitcoin halving event has dominated the news more recently.

In non-Bitcoin news, Ethereum launched its Dencun upgrade in March, improving its integration with layer-2 blockchains.

What, then, of decentralized finance (DeFi)?

In December 2023, Cointelegraph asked industry experts to predict the future of DeFi in 2024. One of the experts we spoke to was Kevin de Patoul, CEO of crypto market maker Keyrock.

At the time, de Patoul pointed to tokenized U.S. Treasurys (T-Bills) and the tokenization of other real-world assets (RWAs) as significant trends to watch. Amid the market resurgence, Cointelegraph caught up with de Patoul to ask if DeFi was progressing as he expected:

“We do see more and more real-world assets on-chain,” confirmed de Patoul. “The T-Bills were the big hit of last year. Things have continued to grow, but by a bit less as the rates are a little less enticing. We are continuing to see that story unravel. We are very much in the process but it is something that will take a long time.”

BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), which launched in March, is one example de Patoul highlighted as on-trend,  demonstrating a convergence of tokenized real-world assets and stablecoins. BUIDL seeks to offer a stable value of $1 per token while paying daily accrued dividends to investor wallets at the end of each month.

DeFi bull market confounds expectations with RWAs and ‘recursive airdrops’ image 0 Over $1 billion in U.S. Treasurys have been tokenized. Source: Dune Analytics

De Patoul also cited PV01, which issued its digital native bond as recently as April 8.

For de Patoul, however, these examples only constitute “baby steps” toward a much larger transformation where every asset eventually becomes digitized. De Patoul says these changes will take time to be fully realized.

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“It’s not something that I would see happening in one year,” said de Patoul.

As de Patoul explains, “Crypto is a proof-of-concept for digitally represented value,” and if the last 15 years have demonstrated the efficacy of that proof-of-concept, the next 15 will be about expanding the franchise.

“Where are we going to be in 15 years — what will the world look like when all assets are on-chain?”

It’s a question that demands untypically long-term thinking in an industry where most participants are notoriously impatient.

Exceeding expectations in DeFi

The tokenization of assets is a trend that was widely predicted, but Eduard Jubany Tur, founder of perpetual trading exchange ZKX, still finds some surprises in the details.

“We spent years talking about crypto going to the real world, and actually, the real world came into crypto,” Tur told Cointelegraph.

“RWAs are happening, and they’re happening on-chain on the main networks,” said Tur. “I think that’s a very different shift compared to what the entire industry has been working on in the last ten years, which traditionally was permissioned blockchains and specific infrastructure built for institutions.”

Tur explains, “What we’re seeing now is that institutions have realized that these decentralized networks fit within their risk parameters, and they actually just deploy directly onto Ethereum and other networks.”

As Tur points out, this “is an incredible achievement for the industry” and something that simply could not have been predicted just a few years ago.

The evolution of DeFi

Danny Chong, founder of yield-enhancing asset tracker Tranchess, believes that 2024 is realizing the predictions made in 2023 — especially with regard to RWAs.

Similarly to Tur, Chong points to the convergence of “crypto into the real world, the real world into crypto” and tells Cointelegraph, “DeFi is evolving.”

“Crypto is now being invested in or being looked upon with interest by the financial giants, the likes of Fidelity, the likes of BlackRock, the banks and so on.”

For Chong, the spot Bitcoin ETFs are just another example of this convergence, but they won’t be the last. In fact, traditional finance and crypto are becoming increasingly intertwined.

Chong admits surprise at the speed with which “centralized DeFi” has emerged and accelerated as a trend, even if the concept appears to be a contradiction in terms.

“People realized that having some form of centralization in DeFi may not be a bad thing. It’s becoming more acceptable as time passes. So we now have DeFi protocols that have some element of centralization,” said Chong.

“Some DeFi users who are extreme purists have even come to terms with the fact that, actually, it may not be that bad a thing. At the end of the day, people in DeFi — or in the real world of finance — all they want is, first of all, protection of their money, and second, returns.”

So, while the sector’s idealism may suffer, centralization will continue to gain traction in DeFi.

Good intentions never last

Tur points to another area where reality erodes idealism.

In December 2023, the crypto market was in the grips of a long winter, but as April comes to an end, the market is bullish once more. Tur believes bear cycle psychology is reflected in the industry predictions of December 2023.

“It’s an interesting situation because during every bear market, I think people tend to think that’s when we’re going to, and excuse me for the language, ‘wash our sins away,’” Tur told Cointelegraph.

It is often said that the bear market is a time for building. Tur explains that it is also a time for good intentions and seeing the best in the market. But those good intentions are easily forgotten when the bull begins to outrun the bear.

As Tur puts it, “At every turn in the market, we prove ourselves wrong, and we go back to the same old shenanigans — but with greater energy.”

“We’re back into what I call Ponzinomics, which is probably the law of gravity in crypto. How do you pile up and distribute incentives in a way that motivates users to come and use different protocols?”

The solution that the market has chosen this time is what Tur calls “recursive airdrops.”

As Tur explains, “The idea of recursive airdrops is that you can use different platforms, and each platform will give you points or potential eligibility for airdrops of other third-party platforms.”

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In this new paradigm, depositing liquidity on a protocol can potentially make you eligible for multiple airdrops. The issue for airdrop hunters is the rules for airdrop qualification are not always clear or publicized in advance, making the sport a form of educated guesswork.

Similarly, picking a winner with layer-2s may be a challenge. Tur says to prepare for “a Cambrian explosion of layer-2s, and as we have seen in the past in crypto, about 90% of them will disappear or fade away.”

But for developers and airdrop hunters alike, that’s the gambling spirit bull market optimism creates.