After several years of consolidation in crypto markets, new innovative protocols are attracting interest. Interest has created a new crypto hype that is reminiscent of the 2017 ICO boom. As it happened in 2017, there are a large number of protocols in the crypto market.
This time, the focus has shifted from CeFi to Defi. Decentralized finance, known as Defi, has become a topic of discussion in 2020.
Bitcoin and the wider crypto market gave blockchain technology and decentralization. However, there was an element of centralization in the Ceci sector. Centralized finance governance and KYC / AML requirements are filled with requirements to meet investors and government demands.
In contrast, Defy is currently truly decentralized. With an ethos of permutations and trustlessness, there is no real governance. And, there are no KYC / AML requirements. In fact, all user needs to use decentralized finance is a wallet.
In concept alone, it is likely a mouthful of food. True cryptocurrency still has to break into Fiat Money’s unwavering position as the primary payment source.
However, when considering non-banking, disgruntled, and anonymous people, Defi can give the banking sector a run for its money.
Projects and Returns
As the entrepreneur and scam artists enter the world of Defy, numerous protocols have gained attention amidst the haze.
While there is no guarantee that these protocols will be here tomorrow, there is hope and with it the dream of incredible earning potential.
Some of the more promising protocols have found early success, based on Coingecko’s Defi market cap. These include:
At the time of writing, the chainlink Defi token topped the chart. Not only has Chainlink, DEFI topped the list, but Chainlink’s meteorite rise has also seen it rank among the top 10 crypto giants in the market. CoinMarketCap currently has a chain link at number 8, effectively beating the likes of Bitcoin.
Year-to-date returns: 473.2% by end of day 28 September 2020.
What is publicity? With Defy powered by smart contracts, Chainlink connects smart contracts to data sources. Additionally, users can send payments to bank accounts and payment networks from a smart contract.
Dai Defi is third on the market cap table and 25th on the coin market cap.
Year-to-year: Investors would have been exempt from elsewhere, however, with Dai just 2.02%.
Why the low back? The midwife is decentralized and supported by collateral. In other words, Dai is a stable currency and, therefore, wants to maintain a value of $ 1.00. The market cap position, however, indicates the degree of adoption in the Defi space.
Uniswap comes in at number 6 and number 42 in the CoinMarketCap rankings.
New in the market and launched on September 17, the founding investors have received a return of 1,318%.
The protocol allows investors to supply liquidity and swap tokens.
Yearn. finance is ranked number 4 on the Defi market cap list and number 27 in the crypto coin market cap ranking.
New in the market with a July 2020 launch date, YFI has given Genesis investors a launch return of 2,623% since.
The road ahead
While many of these protocols will likely survive early bounce days, there are many that will fall by the wayside.
The ICO boom of 2017 requires investors to go back only 3 years to get a glimpse of what lies ahead.
Just like in 2017, however, the talk of 1,000% returns is drawing investors back into the crypto world. For those who entered the boom of 2017 late, though it may take a little longer.
Currently, market leaders report the large existence of scammers and Ponzi schemes in the Defy space. The current rise in DIFA’s market cap indicates that investors are ready to take another share of the cherry.
Unlike investing in the CeFi protocol, however, Defi is a reliable and permissible location. This means that there is little to no governance, testing, auditing, etc. Therefore, this means that some protocols that pull investors’ money may disappear in weeks, if not days.
For the same reason, investors are seeing exception returns. Protocols are attracting investors into the defi space, luring them with double-digit returns from least-risk products.
These include yield farming and liquidity pooling that top the cherry for investors today.
There may be some way to rally, considering the fact that DIFI is still exclusive. This, of course, is that the victims of the 2017 crypto meltdown lick their wounds and come back…
With platforms such as Binance setting up US $ 100m funds for new projects and fund development, DeFi’s future looks bright. However, this does not mean that there will be no cautionary tale.