In the past, we’ve written about the DeFi ecosystem and its potential to be everything investors ever wanted cryptocurrency/blockchain Finance to be. With the ever-stronger Ethereum network driving what seems like new life to the ecosystem, one question arises: Is the DeFi market mature enough for institutional investors?
Sustaining a new kind of power.
Many consider the current avalanche of DeFi tokens to be the beginning of a transformation of not only the DeFi world, but of the crypto market in general. With the total value locked in the ecosystem reaching a new All-Time-High at $1.65 Billion this Friday, it’s hard not to be excited by the new stream of projects and innovation placing new financial instruments on decentralised ledgers.
This week also saw Compound become the predominant platform in the market, accounting for 38% of DeFi’s already strong presence. Compound released its token, $COMP, to allow users to control its lending platform’s governance system. Thanks to the enthusiasm generated by this, plus the beginning of Balancer’s BAL token distributions, the aggregate value of all DeFi protocol tokens rose to around $6 Billion. The lending platform confirms with its actions that the new wave of finance is here to become a mainstream of the crypto market.
And, while new options surface, traders already experience the benefits. Yield farming (the process of creating elaborate systems to benefit from multiple DeFi protocols at once) has so far paid better APYs than ‘traditional’ investments in real estate, stocks, or bonds.
The 90-day chart for Compound’s Value Locked is what every crypto believer has been hoping to see since 2017.
Newcomers in the market: xDai and DMM
BAL and COMP are not the only new tokens. In fact, the number of options available in the market seems to rise day after day. To name some of the original, more exciting projects allowing users to leverage the new financial ecosystem:
- DeFiMoneyMarket (DMM) enables users to earn interest by exchanging crypto-assets for tokens to participate in the exploitation of “real-world income-generating assets viewable on-chain”.
- xDai is a stable chain pegged to the value of $1, outstanding for its energy efficiency, transaction speed, and compatible with multiple other chains, making it an ideal asset for transactions across DeFi platforms and yield farming (see below). On the same chain, STAKE allows users to govern the platform.
Is it time for big players to step into DeFi?
Many analysts believe the recent COMP-fueled rush to have been, in part, aided by an influx of experienced traders and institutions into the system. The crypto market has been responsible for extraordinary payoffs for those that know how to tread its waters, and this time there is more press, capital and recognition devoted to blockchain systems. Few, indeed, would want to miss partaking in another bull run.
At D-CORE, we specialise in performing crypto-dedicated research for institutional investors. Devoting a distributed group of researchers to source the best possible information on this kind of projects, we’ve noticed that bridging the gap between institutional investors and the crypto market would tremendously benefit both entities and legitimise the system. We’ve made it our mission to provide you with actionable information to discover a market full of new, exciting possibilities.
Limited information, lack of expertise on new technologies, and general distrust should no longer be a reason to stay out of the crypto market. Particularly not when we might be living the first steps towards the decentralisation of finance.
Time will only tell if this happens… but in the meantime, things are certainly looking up!