Decentralized finance (DeFi) is an emerging ecosystem in which no third parties are involved in transactions, and the centralized system is replaced by a community-driven environment. Many consider DeFi to be the future of finance, where transparency, interoperability, and financial inclusion will improve industries and protect users from vulnerabilities.
Some of the driving factors of DeFi’s popularity include the growing demand for opportunities and development and the growing technological advancements in decentralization. Several financial tools, such as meme coins, contribute to DeFi by expanding use cases. Shiba Inu, for example, designed a broad DeFi ecosystem where users can swap tokens on highly liquid trading platforms, stake tokens, and receive vote-escrowed tokens like veTREAT.
In addition to meme coins, stablecoins and artificial intelligence will have a huge impact on DeFi in 2025 and beyond. Let’s see how.
Stablecoins in DeFi
Stablecoins are digital assets backed by fiat money that offer them protection from market volatility. Tether, for example, is pegged 1:1 to the US dollar. Tether Limited, the organization that issued the coin, claims reserves are backing up the asset, which is a common practice for stablecoins.
Stablecoins are beneficial for users who want to protect themselves from the risks of volatility. However, investing in stablecoins might not provide the same returns as cryptocurrencies do, which is why they’re more lucrative in the long term. This aspect makes stablecoins ideal for liquidity, an essential factor in DeFi.
Therefore, stablecoins offer:
- Consistent returns from yield farming and lending;
- Seamless cross-border transactions with low fees and reduced times;
- Access to financial services for the unbanked;
- A reference point for cryptocurrency pricing;
DeFi platforms facilitate the shift conversion between cryptocurrencies and stablecoins, making both assets interlinked.
Meme coins in DeFi
Many financial industry users consider meme coins of no real use in the market, as developers created them solely for entertainment. Dog-inspired meme coins, such as Dogecoin, Shiba Inu, and Dogwifhat, are most popular, as they bring a smile to people’s faces, reminding them of funny memes and wholesome images.
However, meme coins have the role of enhancing community engagement in DeFi, as they own the power of bringing users together. They can benefit the environment with user loyalty, showing the importance of a project in keeping investors and traders receptive.
Finally, meme coins are known for innovation and finding utility, which is important for DeFi to evolve. The Shiba Inu ecosystem has worked hard to expand its tools and technologies, such as a layer-2 blockchain, a metaverse, and an operating system for building apps.
AI in DeFi
Artificial Intelligence is slowly becoming the backbone of the future technological world, where automation and predictions will contribute to a flourishing financial system. AI can help DeFi by harnessing data processing and employing fraud detection in dApps (decentralized applications).
Other use cases of AI in DeFi include the following:
- Automation in the lending and borrowing processes;
- Predictive analysis for informed decisions;
- Machine learning algorithms establishing security measures;
- Facilitating compliance towards regulatory requirements;
- Personalization of user interface for DeFi services adoption;
While AI has great potential for DeFi, developers will face several challenges when blending these technologies. For example, the current security risks associated with AI algorithms might cause data breaches, while the lack of transparency in AI processes can hinder user trust. Moreover, the regulatory uncertainty about both tools makes it difficult for creators to truly contribute to their adoption.
Why should we push for DeFi development?
Traditional finance, also known as TradFi, is barely catching up to technological developments, as the global innovation dynamic is faster than expected. Financial services are pretty limited worldwide, so many people are unbanked. Transaction costs are getting higher, and the slow processing times make people look for alternatives.
That’s why DeFi could be the solution to all these problems. The industry prioritizes transparency, efficiency, and accessibility through innovative tools like smart contracts, blockchain, and cryptocurrency. Due to its decentralized features, DeFi works without intermediaries, so there are no risks of using customer data for business purposes. This is possible because users have control over their shared information, and DeFi empowers individuals to use, secure, and invest in their own assets.
DeFi is also striving for innovation by taking advantage of the broad range of blockchain technology. For example, people can use Uniswap to swap ERC-20 tokens through liquidity pools on Ethereum, while Solend can lend and borrow crypto on Solana.
DeFi challenges and future opportunities
Several aspects hinder the innovation and adoption of DeFi. For example, smart contracts used to create decentralized apps and decentralized autonomous organizations (DAOs) are prone to code vulnerabilities. If these vulnerabilities are not prevented, malicious actors can exploit them and affect an app’s security, which is why decentralized products and services need frequent smart contract audits.
Another challenge in DeFi is the lack of insurance. TradFi offers insurance for deposits and other financial services, but DeFi still lacks proper regulation for this system, meaning users are in danger of losing their invested funds if the project fails for various reasons. Luckily, DeFi insurance protocols are developing, and they’re backed by governance, claims processes, and risk assessment.
On the other hand, if we consider the opportunities of DeFi, AI and algorithms will be the driving forces of the ecosystem’s evolution towards Web3. With proper collaboration between governments and decentralized organizations, DeFi has the potential to bring services and products close to the people who need them. Therefore, user education is important, and startups should spread awareness of the benefits of DeFi and contribute to educating future users for easier migration between technologies.
Final take
DeFi might be the future of finance, and it will include tools like stablecoins, backed by fiat money, meme coins inspired by memes, and artificial intelligence. These features will enhance asset diversification and push for technological development, so in the future, users will be able to make transactions on blockchains and borrow and lend money to decentralized ecosystems. However, challenges like lack of regulation might hinder progress.
