The 3 biggest DeFi innovations of 2023

As technology improves, we take a look at some of the achievements made in DeFi innovation this year


DYdX founder Antonio Juliano | DAS 2022 New York by Blockworks


Decentralized finance has seen some significant improvements over the past year.

Here are some of the major milestones the DeFi space has seen since the start of 2023.

1. Cross-chain communication for more interoperable blockchains

Cross-chain communication protocols seek to enable different blockchains to communicate with each other. They are designed so that data and value can be connected between separate systems, enabling tokens or assets to be transferred between separate networks. 

This type of technology allows decentralized exchanges to tap into more liquidity pools and give applications access to technological functionality across other blockchains. 

Squid, a cross-chain liquidity routing and swap protocol, for example, has enabled one-click swaps between EVM-compatible chains and Cosmos app chains. This means that users can swap tokens using one click between various decentralized exchanges on different blockchains, like Uniswap and Osmosis. 

Read more: Squid enables one-click cross-chain swaps on Cosmos

2. Smart accounts through ERC-4337

ERC-4337 account abstraction is a standard to make crypto accounts more flexible. There are two types of accounts on Ethereum: externally owned accounts (EOA) and contract accounts.

EOAs are described as accounts with a public and private key that hold user funds. To receive funds from another user, a public address must be given, but to access funds that have been transferred, one can only rely on a private key.  

On the other hand, contract accounts through ERC-4337 enable users to manage their wallets without having to possess their own private keys, and does not require users to hold Ethereum in order to make transactions. 

Read more: What are smart contract wallets? A beginner’s guide

Currently, much of smart contract wallet functionality has been focused on account recovery

However, account abstraction can also enable digital identification verification, which enables functions like anonymous voting and fraud verification. 

3. Improvements to decentralized derivative exchanges 

Decentralized derivatives aim to offer a more transparent way to trade. By removing intermediaries, traders no longer need to manage their assets and keys through a third-party custodian. 

Derivatives generally enable traders to derive value from crypto assets by speculating on their price rather than requiring them to actually own the asset itself.

The launch of dYdX v4 this year introduced a fully decentralized order book and matching engine, meaning that no central intermediaries would be operating the network and all network fees generated by the DEX would be redistributed to stakers. 

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research



Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.


Plus, Imran Khan’s intriguing experiment on the speeds of crypto onramps


The SEC has signaled a timeline to issuers that could lead to a July 23 launch for the ETH funds, people close to the process told Blockworks


PayPal has unequivocally made a name for itself as a crypto adopter among fintech giants


Also, a look into how the highly-debated SAB 121 could end up shaking out for crypto custodians


Vance, an Ohio Republican, is largely seen as crypto-friendly


Plus, all the world is green as prices across the crypto space rally, with solana reaching a nearly two-week high