Towards the end of 2020, it’s a good time to ponder the biggest developments in the crypto space and the wild ride that investors in the sector have seen.
At the beginning of the year, The price of Bitcoin (BTC) hovered around $ 7,000, and the high-ranking digital asset had gained momentum as it approached the halving of block rewards. Then came the coronavirus pandemic and a sharp correction in global stock markets that triggered the infamous Bitcoin crash on Black Thursday, what did that do The price of BTC fell to $ 3,782 on March 12.
While it looked dark to Bitcoin and the great global financial ecosystem, The decentralized financial sector began to warm up.
A new wave of DeFi protocols has turned bad and hard-to-navigate decentralized exchanges (DEX) and apps like EtherDelta into high-volume, high-yielding unicorns that have consistently given investors consistently high returns. In terms of total locked value (the value of assets tied to a protocol), transaction volume, and market capitalization, many DeFi platforms and their respective tokens are now competing with major centralized exchanges.
In 2020, the decentralized spirit of cryptocurrencies was really established, and decentralized peer-to-peer smart contracts trading has advanced to the point that any investor with a MetaMask portfolio and a few dollars worth of BTC in Ether ( ETH) or Tether (USDT) can easily access a new ecosystem of exclusive projects for passive income generation.
In addition to the high returns with DeFi tokens Investors were also able to get into a new form of participation, which consists of offering their assets as collateral to small cryptocurrency and blockchain startups in exchange for newly minted tokens. Typically, tokens gained significant value instantly and gave the stakers or farmers a return. This phenomenon of “Profitable agriculture” It started with the launch of Compounds COMP in June.
The yield trend symbolized the radical nature of the DeFi ecosystem. Some projects were clearly designed to fatten up their creators’ portfolios, taking advantage of the FOMO and the naivety that characterizes many new emerging market investors like cryptocurrencies. For example, a common farming mechanism requires users to purchase a certain number of existing tokens before receiving a return. Often times, due to immense inflationary pressures in the early stages, yield farmers dominate the token price action and are themselves the source of the return they seek.
However, several top-notch DeFi projects emerged and gained importance thanks to high-yield farming. To this day, the communities of such projects continue to grow and offer revolutionary new financial concepts that could change the face of cryptocurrencies and traditional financing.
Uniswap: A DEX to rule them all
It can be said that of all the projects that have gained in importance in 2020, Uniswap was a key player in triggering the boom in the DeFi ecosystem. The platform provided a new ecosystem where anyone could create and list a token on the Ethereum blockchain without having to pay the listing fees for exchanges or participating in an exchange incubation program.
While Uniswap launched in 2018 and has seen steady growth throughout its life, in 2020 it hit highs that few could have expected. With an average daily volume of less than $ 1 million in the first half of the year, the protocol raised billions of dollars in liquidity during “DeFi Summer,” peaking at nearly $ 1 billion. Although the DeFi hype has since subsided, Uniswap’s volume numbers consistently challenge some of the more established centralized exchanges.
In a review of the ICO days 2017, Uniswap unveiled its UNI Governance token on September 16 and tossed 400 UNI tokens on each wallet that had interacted with the protocol. east “DeFi Stimulus Check”, As it was called because it was originally valued at around $ 1,200, it sparked a fresh outbreak of excitement and turmoil around the project UNI’s price rose briefly to $ 8.39, which is more than $ 3,300 in air drop.
Yearn.finance: the masters of high yield agriculture
With the opportunities for ROI on cryptoassets multiplying in the DeFi ecosystem, aggregation services have become increasingly necessary for average users to optimize their profits.
Yearn.finance and its governance token YFI have proven to be the gold standard in space. The team combined the best of smart contracts and the traditional financial system to create a unique ecosystem of services that are essential for investors.
Early data shows that the price of the YFI token was $ 790 on July 17th. However, when the dealers found out about the project, YFI caught fire and at one point saw the token price rise above $ 43,000.
Yearn.finance is perhaps the greatest success story of the summer, as the short distribution of income farming created a close, decentralized and professional community of developers and users. The project eventually destroyed an entire DeFi conglomerate by merging it with a host of other protocols from other niches.
The team continues to deliver new and innovative products at breakneck speed while remaining a grassroots and decentralized community.
The admirable consistency of Aave
Aave is another DeFi success story for 2020. Formerly known as ETHLend, Aave was founded on the simple premise of Create a decentralized financial log that allows users to borrow and borrow crypto assets.
Aave was originally launched as part of the 2017 ICO madness and survived the crypto winter despite numerous challenges. Since its inception, the project has gone through several protocol changes and a token swap to emerge as a major competitor within the DeFi ecosystem.
At the beginning of the year, The lending price was $ 0.02 (equivalent to a value of $ 2 with Aave’s current token) with a daily volume of $ 10.6 million. Since then the price has exploded maximum USD 95 and a daily operating volume of nearly $ 222 million.
According to DeFi Pulse Aave is DeFi’s fourth platform, currently valued at $ 1.73 billion supplied by its users.
During the year Aave pioneered innovative features in DeFi lending. It was the first company to offer synthetic collateral for the exchange’s token pool. a poorly secured credit facility in place; and introduced many improvements to the user experience with its V2 platform and AAVE token.
SushiSwap shows that imitation is the most sincere form of compliment
The crypto room would not be “crypto” without a good fork saga. And SushiSwap’s vampire attack on Uniswap is probably one of the most dramatic events of 2020.
SushiSwap started by reusing Uniswap’s code and devising a nefarious plan: it only accepted Uniswap’s tokens for income farming and automatically redeemed them at the end of the period, pocketing the underlying liquidity for itself. The platform’s SUSHI governance token was developed to change and control the decentralized autonomous organization (DAO) associated with the protocol. Still, the yield that farming the token implied remained its biggest draw.
A popular cocktail and stock market listing drove SUSHI to highs of as much as $ 15 after starting at a price of 0.15 and attracting more than $ 1 billion in income capital for agriculture. The system was only partially successful in stealing Uniswap liquidity as the total blocked value increased in line with SushiSwap’s, showing that Uniswap’s existing liquidity providers were unwilling to take the plunge.
In a dramatic turnaround, the project’s chief developer, Chief Nomi, abruptly sold SUSHI tokens worth around $ 14 million and announced that he would be leaving the project. SushiSwap users immediately interpreted this maneuver as a carpet pull or exit scam, and the log’s total locked value fell when the price of its governance token fell below $ 1.
Finally, the uproar in the community convinced boss Nomi to return the 14 million in ether received from the sale of SUSHI. However, the damage to the value of the token and the image of the platform was already done.
Despite this scandal, the community continued to grow the platform, and the recent merger between Yearn.finance and SushiSwap helped restore confidence in the project despite its tumultuous history.
The platform currently has locked liquidity of $ 1.13 billion and the SUSHI token recently swung above $ 3.
YFII shows that more is not always better
Like Uniswap, Yearn.finance’s YFI token was followed by a ton of clones trying to drive on the slopes of the popular DeFi token.
DFI.money (YFII) It was originally released as a simple clone of Yearn.finance, and the protocol has been attacked by many members of the DeFi community as the project seemed pointless.
Some exchanges, such as Balancer, have blacklisted the asset because it was advertised through Medium from a pseudonymous account. while the project seemed to have no more value than being a YFI clone. Some analysts compared the controversy to the Bitcoin / Bitcoin Cash divide, albeit much less shockingly.
Any listing on Binance caused the price of YFII to rise to $ 8.54, and for a moment traders viewed the token as a cheaper alternative to investing in YFI. As with many other DeFi tokens, the price of YFII withered when a sharp correction in retained earnings hit the DeFi sector, and the team’s lack of clear direction and fundamental development has kept the price below the $ 2,000 mark.
Currently, YFII is trading near USD 1,660 with a daily volume of USD 86.5 million. The total value locked on the log is currently $ 3.8 million, and when compared to the $ 413.3 million locked in YFI, it hasn’t achieved nearly the same level of success as its “relative”.
Interestingly, DFI.money was only the first of many projects with a YFI fork topic, the other projects were even less successful or legitimate.
The only food craze that combined the worst of DeFi
The “DeFi summer”, as spectacular and logical as it was for the ecosystem, was still a time of exuberance and irrational excesses. And nowhere is that more evident than at Yam Finance.
The project was one of the most popular additions to productive agriculture, and it laid the groundwork for the era of food name or “food brand” projects.
Most food brands were forks with little effort, often without suggesting a product that could be talked about beyond high-yield farming. Examples are tendies and kimchi.
Yam started out with seemingly noble intentions. It was an algorithmic rebase stablecoin that worked like the more established Ampleforth. His appeal was “fair start” through income farming to create a DAO community similar to that of Yearn.finance.
Yam was one of the pioneers of the “circular pool” concept, in which some farmers initially had to buy 50% of the value of their capital in YAM tokens in order to receive more YAM tokens in return. This, along with the promise of a fair start, sparked a wave of interest and activity among large parts of the community.
The protocol raised hundreds of millions of dollars in capital, but there was a fundamental flaw: Smart contracts have never been tested, let alone reviewed by a professional team of security researchers. Although the founders made it clear, it didn’t deter the farmers, much to their chagrin.
The developers of the project made a fatal mistake, they forgot to divide by 10 to 18. Ethereum smart contracts use very large integers to represent decimal values, so developers do calculations when calculating and divide by that factor.
The first overflow of the project thus resulted in a large number of new coins, all of which went into the treasury. This made it impossible to reach a voting college and blocked the minutes forever. The error became irreparable.
Yam was later restarted but never reached the same spikes in popularity as it did in the early stages. The experience served as a vivid reminder of how things can go wrong in the DeFi ecosystem.