Unlike Bitcoin, which has stalled in the low-$9,000s, Ethereum-based decentralized finance (DeFi) has seen exponential growth over the past few weeks. DeFi’s growth has seen an intense recovery in the months since, however, with the total value locked within collateralized loans reaching fresh all-time highs earlier this week. One of the hallmark examples of DeFi’s current popularity can be seen while looking towards the recent launch of Compound. The token associated with the platform – COMP – has seen a parabolic price rise, but many investors are speculating as to why this hasn’t created an upwards tailwind for ETH.
According to DeFiPulse, there is now in excess of $1.3 billion of value locked in Ethereum DeFi applications. Yet ETH has yet to trend higher on the back of this positive fundamental trend, leaving many scratching their heads as to why this is the case.
ETHEREUM DEFI PROTOCOLS ARE RAPIDLY SEEING ADOPTION
Ethereum-based decentralized finance has performed extremely well over recent weeks.
This can be attributed to a confluence of catalysts:
Coinbase has begun to list a number of DeFi tokens.
Investors are seeking non-BTC investments and use cases after the altcoin crash of 2018-2019.
Cryptocurrency users are looking to leverage their investments, leading them to DeFi.
Aave, the flash-loan boys have also seen considerable gains. This thing rose from 2 cent in April to now 13 cent.
Bancor, they had some sort of bug which wasn’t exploited, but who cares, up 6.5%. That’s while both bitcoin and eth are either not moving or slightly down.
Augur itself is also up 7%. They getting V2. What that is exactly we might find out, with that specific area also innovating to the point now you can bet while only winning.
No signal shows DeFi’s recent out-performance as well as Compound’s COMP token, which is trading more than 900% higher since Monday of this week.
Analysts see COMP’s parabolic performance as a sign of what’s happening to and what’s to come for DeFi.
Compound, an ethereum based token launched just six days ago is now close to reaching a $4 billion market cap. It’s price has increased by another 78% today as seen above, making it a week long rise by about 50% daily. There are meant to be 10 million comp tokens in total, currently priced at $363 each, significantly more than ethereum’s current price of $230 based on a total eth supply of 111 million. For Compound only 2.5 million are currently circulating, tradable on numerous exchanges at this point and from Monday it will be available on Coinbase Pro as well. Some 4 million comp tokens are in the process of being distributed to the users of the financial dapp which has seen a 5x increase in its assets under management for the past week. That increase was due to the launch of the token, with a new business model now arising whereby a dapp can build a product and attract users, then it can go public through a token distribution.
Yield Farming: Crypto as Collateral
Your getting paid to take risk. This is how financial industries work. People are going to start jumping into DeFi and use investible assets like Ethereum or Bitcoin as collateral.
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