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Blockchain evolution trends: payments and settlements continue to dominate

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Binance Research

Payments and settlements continues to be the main areas of growth for blockchain-based projects. A post shared by Binance research also shows that operating systems or blockchain as a service (baas) constitute the second biggest area of growth. Banking services come third while stablecoins round up the top 4.

Payments & settlements is easily the area attracting most projects because of the enormity of the market opportunity. For example, cross-border payments is a $125 trillion market$125  while remittance market is a $600 billion market. Capturing just a small percentage of that market would constitute substantial gains for blockchain companies that get it right.

A look back at 2017, which could be termed as a landmark year for ICOs, show that blockchain infrastructure, banking and payments , computing and data storage were the top industries in terms of capital raised as well as popularity. This shows that interest in blockchain infrastructure and payments has been consistent for a while now.

 

ICO industries in 2017

Source: ICO Rating data

decentralized finance

Further analysis shows that ethereum continues to be the birthplace of most decentralized applications (Dapps) more so the decentralized finance (DeFi) projects. As per the latest June 2019 Binance Research Maker Dao is the cornerstone of ethereum’s decentralized finance projects. Lending/borrowing protocols continue to be attractive because of the attractive incentives offered to market participants. Even though the crypto-lending space is still nascent, it provides compelling value proposition of providing new credit models commensurate with increasingly digital world. Transparency, ease of access and immutability are some of the attractive features while technology risks and low liquidity are some of the existing challenges.

Binance research

Meanwhile stablecoins have gained the largest market value in the period under study, 2018-2019 Q1. Recently many legacy institutions such as JP Morgan and Facebook have announced plans to launch stablecoins as they prepare to make in-roads into crypto. It is expected that interest in stablecoins especially for non-blockchain based institutions will continue to be attractive in the near future. On the other hand, supply-chain projects have showed least growth in 2018-19. Supply-chain based projects came into the limelight in 2017 when IBM and Maersk announced that they were working together to look into ways of leveraging blockchain to improve transparency in the supply chain process. Later in 2018, they launched Tradelens with other partners.

Even super retailer chain Walmart announced that it would start tracking its suppliers from farm to consumers using smart contracts in a  bid to increase transparency. No new developments have been announced in this area. Also showing little progress is retail e-commerce and healthcare. Nonetheless these types of implementations would require more study, partnerships and testing before working at scale. It is easier to implement payments or trading-based projects than say, supply-chain or medical healthcare. On a longer time-frame, say 3-5 years, further analysis based on outcomes would showcase the viability of such projects.

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