DeFi projects have dominated the headlines lately, and the unexpected departure of a high profile founder has had an impact on all cryptocurrency markets. Here are the top stories from the past week:
SUSHI’s parabolic surge came to an abrupt halt when the project lead cashed in all of his tokens earlier this week and the resulting sell-off pushed the rest of DeFi, ETH and Bitcoin (BTC) from their positions, some of which were highs for the year.
However, there is a ray of light in this cloud.
Snapshot of the weekly performance of the cryptocurrency market. Source: Coin360
SUSHI’s chef is “leaving the kitchen”, but can the rest of the cryptocurrencies take the heat?
SushiSwap, a fork from Uniswap, Uniswap liquidity successfully migrated to its own protocol. On SushiSwap, tokens were worth around $ 810 million, or 55% of Uniswap’s liquidity. By the end of the process, SushiSwap’s value had hit an all-time high of around $ 860 million, according to DeBank.
Shortly after SUSHI reached this level, the anonymous founder “Chef Nomi” withdrew all funds from the company’s coffers (worth about $ 27 million) shortly after insisting that the money be for development was and not I would take it away from the companyand then insisted on Cointelegraph that it didn’t do an exit scam. This move resulted in many crypto comedians claiming on Twitter that Nomi had “left the kitchen”.
Unsurprisingly, the SUSHI token was sold almost immediately as people lost confidence in the feasibility of the project. The liquidation was so quick that it torpedoed the entire crypto sector and took away the rest of DeFi and even ETH and Bitcoin. At one point, DeFi was down about 50 percent overall from previous peaks.
Various experts have talked a lot about the bursting of the DeFi bubble and even compared it to the ICO bubble, saying that people have not learned anything since then.
While the “bubble” as it is may burst at some point, it would be premature to call this the end of the DeFi era. After all, projects like Cardano (ADA) and even Tezos (XTZ) could one day join the party.
A rising tide … eventually goes back
Bitcoin and other tokens have outperformed most of the year until recently, with the largest cryptocurrency trying to end the week cautiously and steadily on a positive note.
In addition, despite the uncertainty of the market after the surrender, there are a number of positive aspects to consider Chef Nomi, who didn’t help at all to trust and sparked widespread capital flight, was concerned about fraud cases at the exit.
BTC fell below $ 10,000 after breaking above $ 12,400 the previous week and has held at this important support level ever since.. However, ETH has had a streak of bad luck, falling from its highest level since 2018 ($ 485) a week ago to just $ 322 at the beginning of the week, before settling between $ 360 and $ 370 in the past few days.
Starting Friday afternoon, there are signs that the market is building solid foundations before attempting to rebound. DeFi’s capital flight has slowed and the reversal of leveraged positions due to the flattening of the futures curve has also reversed.
DeFi disappearance rumors have been greatly exaggerated
DeFi is not available, but it is hardly extinct. New money continues to pour into existing protocols, and more will no doubt be built. With them will come economic and community support.
Total DeFi Value Locked (USD). Source: Defipulse
There is another big difference to the 2017 ICO boom: There is a much more established secondary market. In the past two years The digital asset markets have grown by leaps and bounds, largely due to the rapid maturation of the projects and the people behind them.
In the world of DeFi, Traders can earn so-called governance tokens to provide liquidity for decentralized exchanges and credit protocols like Balancer and Compound. Governance tokens can be used to vote on improvements to the underlying protocols.
That kind of incentive didn’t exist a few years ago when people poured money into steamers on white paper and a prayer. Times are changing and DeFi could potentially lead the way.