The financial ecosystem has seen a major transformation since the advent of blockchain technology, and particularly bitcoin. Blockchain technology has enabled businesses to transition from centrally governed systems to more democratic and decentralised systems.

The year 2021 was an exciting one for the decentralised finance (DeFi) space with the total value locked (TVL) in DeFI applications skyrocketing from $22 billion on January 1, 2021, to $220 billion by the end of the year. TLV is the total of all assets deposited in the DeFi protocols that are earning interest, new coins, or other such rewards. The broader crypto market also grew, pulling the DeFi market up along the way.

So what does 2022 look like for DeFi? Experts believe DeFi and decentralised platforms, like Decentralised Exchanges (DEXs) and Non-Fungible Tokens (NFTs), will make significant strides this year as they are the underlying infrastructure of Web 3.0, the third version of the internet. Here are the key trends they predict in 2022:

Mass adoption:

The current macroeconomic situation has unlocked new avenues in the world of crypto for the masses -- novices and seasoned traders alike. Traditional physical systems are quickly being replaced by decentralised systems requiring minimum human intervention. But will there be mass adoption?

As Ahmed Al-Balaghi of Biconomy pointed out to Cointelegraph: More scaling solutions will become essential to the mass adoption of DeFi products and services."

Al-Balaghi said while most DeFi applications go live on multiple chains, making them cheaper to use, it adds more complexities for those who are trying to learn and understand how they work.

"To start the second phase of DeFi mass adoption, we need solutions that simplify onboarding and use DApps that are spread across different chains and scaling solutions," he said.

Another expert Alex Tapscott of Ninepoint Digital Assets Group highighted that in just one year, the DeFi industrys market capitalisation has ballooned 30 times to $150 billion. The next decade, he said, will see a billion people, many of them unbanked, get onboarded to financial markets for the first time ever via DeFi applications.

Regulatory action: one of the impedances to institutions is the lack of clarity on regulation and compliance. As various countries brainstorm how to tackle this issue effectively, 2022 is expected by many to be the year when we finalise the rules.

Co-founder of Swarm Markets, Timo Lehes, believes regulation will be imperative in 2022 as those bearing fiduciary duties will not be able to access DeFi through unregulated channels.

Across DeFi, Anti-Money Laundering (AML) solutions and wallets with inbuilt KYC and cross border rules checks will help to increase institutional exposure in the year ahead, said Rachid Ajaja, CEO and Co-Founder of AllianceBlock, in a conversation with CryptoNews. AllianceBlocks Cross-Border Regulatory Compliance Rules Engine allows traditional institutions to access opportunities in DeFi in a compliant way through pre-trade international checks, he added.

CDO of DappRadar, Dragos Dunica, believes despite the regulatory challenges that DeFi is about to be faced with, the sector is well poised to remain unthwarted and continue growing. Governments may even launch their own DeFi platforms and initiatives.

Interoperability of NFTs, DEXs, GameFi, and Liquidity Mining:Once regulatory hurdles are cleared, experts believe the sector will be able to offer increasingly innovative product services to investors. NFTs are expected to top that list.

The NFT craze is gathering steam and we could see the best of it in 2022 in spaces beyond in-game collectibles, artworks, and sports memorabilia. It is expected to grow over 1,000% in 2022 alone, per a Forbes prediction.

In the blockchain-based gaming industry, Axie Infinity has cemented its name among the biggest success stories of 2021. From 38,000 active users in April 2021, the game saw a massive influx touching 2.7 million users in mid-November. This is expected to give a massive boost to GameFi (in-game finance), and DeFi platforms will inevitably be a part of this development.

Liquidity Mining and Yield Farming are two more areas where experts see vast potential. DEXs require a liquidity pool for their smooth functioning, which is crucial in maintaining healthy solvency. The current debacle faced by liquidity providers is the loss caused by the change in crypto prices as they constantly fluctuate. (Also called impermanent loss).

The rise of DeFi platforms has also boosted the concept of stablecoins in the Indian crypto circles. As Nischal Shetty of WazirX pointed out in a Fortune India article, more Indians are thronging the stablecoin market and most DeFi companies have tied up with Indian cooperatives to offer peer-to-peer services and are planning to open more branches and even ATMs.

"...interoperability could also be a game-changer in DeFi. Interoperability could just improve the overall user experience in DeFi, providing a way for users to easily transact between chains and choose the one that suits them most," Ankitt Gaur of EasyFi Network told Cointelegraph.

However, most experts agreed that how DeFi grows in the near future will largely depend on the user experience and the simplification of the onboarding process.

Most of the world has never used a DeFi product. It is up to the entrepreneurs and businesses to build the software tools that make DeFi easy, safe, and useful enough for more people to want to get involved, Roger Ver of Bitcoin.com told Cointelegraph.

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Mass adoption, regulation, other key trends: What's in store for DeFi in 2022? - CNBCTV18