The Integration of NFT and DeFi: Innovative Trends in the Blockchain Field

Recently, NFTs (Non-Fungible Tokens) have sparked a surge in the cryptocurrency circle. Data shows that the average selling price of NFT products was mostly below $50 in 2019, but by August to September 2020, the daily average price had exceeded $100. This significant growth reflects a substantial increase in users' willingness to pay for digital products, marking a new explosive period for the NFT market.

NFT represents a "unique" digital asset that is non-fungible and indivisible. Unlike fungible tokens like Bitcoin, each NFT is unique. This characteristic makes NFTs particularly suitable for representing unique items such as digital artworks and in-game items.

Currently, Ethereum's ERC-721 standard is the most widely used NFT protocol. With the growth in market demand, other public chains have also launched their own NFT development modules, such as Tezos' TZIP-12 and Polkadot's Unique module. This reflects that the NFT ecosystem is rapidly expanding, attracting more and more developers to participate.

The booming development of the NFT market can be seen from the trading data. The average daily transaction volume of NFT projects in 2020 increased by about 105% compared to the previous year, demonstrating strong market demand.

With the rise of Decentralized Finance (DeFi), the integration of NFT and DeFi has become a new direction for innovation. This combination is referred to as "GameFi", which merges the entertainment of gaming with financial incentive mechanisms. For example, some projects allow users to participate in mining or bidding activities with NFTs, increasing the utility of NFTs.

A typical example is an insurance project based on Ethereum, where users can generate NFT tokens based on their policies, and these tokens can be freely traded on NFT platforms. This innovative model attracted a large number of transactions in a short period of time.

However, as the number of users increases, the requirements for the security and efficiency of the underlying platform also rise. The congestion of the Ethereum network and high Gas fees have become the main challenges faced by developers.

In this context, some emerging public blockchains have begun to attract attention. For example, the Tezos blockchain is gradually becoming a new choice for NFT and Decentralized Finance projects due to its high security, low energy consumption, and rich development environment. The deployment of smart contracts on Tezos increased by nearly 70% in the third quarter of 2020, reflecting the rapid development of its ecosystem.

In the future, we can anticipate more integration between NFTs and Decentralized Finance. As NFT products gradually surpass simple entertainment and collection purposes, becoming more diversified and valuable, the demand from developers for secure and efficient underlying platforms will also increase. This creates opportunities for public chains that can provide high-quality infrastructure.

Overall, the combination of NFT and Decentralized Finance represents an important development direction in the application of Blockchain technology, and is expected to bring more innovative products and services.