By Hassan Mehmood (Saudi Arabia)
It is fair to say that DeFi is the champion in the cryptocurrency space as DeFi tokens outperformed other coins in performance.
In 2020, decentralized finance has captured the attention of investors as billions of dollars are locked over DeFi platforms. The growth is witnessed in increasing the values of tokens, such as yearn.finance (YFI), Uniswap (UNI), and Compound (COMP).
One DeFi token, year.finance, even surpassed Bitcoin’s peak value of $20k after claiming $40,000.In summer 2020, these coins even exceeded major altcoins in performance and gained top positions over CoinMarketCap by market volume. Even governance tokens, such as Chainlink (LINK), left behind in market growth.
DeFi sectors unveiled smart contracts that assist in creation transactions between both parties without the participation of third party actors. Much of the projects are built over the Ethereum network as the activity over the Ethereum blockchain has increased exponentially.
Practical Applications of DeFi Projects
Some DeFi projects are extraordinary in terms of practicality and usability, but most newcomer tokens are useless, which are similar to ICOs in 2017 and 2018. The regulators put a strong grip over ICOs in 2018, which calmed the sector. Experts are comparing the ICO bubble with the Defi craze, and expect a similar regulatory pressure soon.
Also read:If we talk about the performance of DeFi projects, it was great. Many tokens reached their peak value before shedding more than half of the values. Even meme tokens showed an exponential increase in values.
Now, a confusion state is created in the DeFi sector, but it has a future as some projects are really useful in practical use. Useless tokens will see dump same as garbage ICOs in 2018.
Ups and downs in the DeFi sectors have a great impact on cryptocurrency markets, and it is also a bad thing for BTC markets. With the rise of DeFi tokens, decentralized exchanges, such as Uniswap, have captured the attention of investors. It has even caught the attention of mainstream media as Bloomberg called it “most sough-after crypto exchange.” There are almost 50k-100k users of the decentralized exchange, while it represents 24% of the total market share.
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