The rapid growth in popularity and investment in the decentralized finance (DeFi) space was largely reflected in DeFi price charts and tokens for income farming such as Yearn.finance (YFI) and Aave (LEND), and others reaching their all-time highs in 2020. YFI alone has grown in value ten times since it was listed.
Actually, Most of the high profile tokens related to the DeFi ecosystem far outperformed Bitcoin (BTC) and other altcoins. Governance and infrastructure projects such as Chainlink (LINK) and UMA, the latter of which became one of the largest DeFi protocols in September, have been overshadowed by DeFi tokens.
So, With all eyes on DeFi projects and intelligent contract platforms such as Ethereum (ETH) and Cardano (ADA), some sectors of the crypto world seem to have been left behind. Above all, payment platforms like XRP and Stellar (XLM).
Comparison of profits and losses since December 2018. Funete: CaneIsland Digital Research
Although smart contract platforms like EOS have made modest profits, They haven’t managed to keep up with their rivals like Ether, the epicenter of DeFi mania 2020 (thanks to most of the DeFi-related tokens which are Ethereum ERC20 tokens).
Ripple lost its charm
Among the top 10 cryptocurrencies by market capitalization, XRP posted one of the worst returns in 2020 and recently lost its position as the third largest altcoin to Tether (USDT). Ripple currently ranks fourth with a market capitalization of around $ 10.6 billion.
While XRP is up 20% since early 2020, it is way behind Bitcoin and many altcoins. In Binance’s Q2 report, the popular exchange revealed that XRP is the fifth worst cryptocurrency within the platform.
The project also had several legal issues, like the longstanding class action lawsuit related to the marketing and sale of the XRP token. Ripple is also facing a copyright lawsuit over its use of the PayID brand. In recent events Santander, one of Ripple’s most important banking partners, was concerned about the launch of One Pay FX, Ripple’s international payment network.
Though it looks dark to XRP, There are some positive signs for the project like growth in on-demand liquidity, which has processed over $ 2 billion in transactions since its inception and grew 11x in the first half of 2020. compared to the first half of 2019.
There are also plans to get closer to the DeFi ecosystem with the XRP partner. Flare Networks announces a project to connect the blockchains Ripple and Ethereum.
Privacy coins also lagged
Cross-border payments don’t seem to be a very popular topic in the crypto space right now. given the speculation about DeFi and the growth in the use of stablecoins. However, There are other sectors that are also not doing as well as DeFi or even Bitcoin, including privacy coins.
In accordance with Messari data, Bitcoin, a digital asset data company, has outperformed many of the privacy coins on the market. While the most popular ones like Monero (XMR) and Zcash (ZEC) saw modest gains compared to Bitcoin over the past 12 months, it was around 5% and 20% respectively.
Things will change when the DeFi bubble bursts
While DeFi-related tokens have seen tremendous returns for their holders in 2020, The buzz surrounding this entire new ecosystem has also spawned a multitude of cloning projects and memes that benefit from all of that excitement.
Some tokens in the DeFi sector have hit their value badly. including the SUSHI token, the main developer of which has sold a significant number of tokens in what some people consider to be an exit scam. Another DeFi sign for a meme that recently caused a media sensation was Hot dog. The sign with the name Fast Food, It lost 99% of its value in 5 minutes, leaving many investors with lots of worthless hot dogs.
While DeFi is lagging behind other sectors in the crypto space, Users should be aware that many of these new projects have very little to offer, reminiscent of the 2017 ICO boom.
This way, the DeFi ecosystem could very soon follow the same steps: Especially since the Ethereum blockchain is still a problem. In this case it is likely that Revenue is bringing Bitcoin back to fiat / stablecoins or other sectors of the crypto space that have been excluded from the recent craze.
On the flip side, DeFi has shown little sign of slowing down in the short term. especially since automated strategies that deliver high returns continue to be developed.
In the future, it is possible that some of these profits will flow back to Bitcoin and some altcoins as investors look for “safer” assets to earn interest. Hence, it may not require currencies and networks outside of the DeFi ecosystem to develop new use cases in order to attract investors.