The speculation and hyperbole are no stranger to the crypto industry. From the heady ICO boom in 2017 to much-vaunted protocols, which claim that the dilemmas of decentralization, scalability and network regulation have finally been overcome, brand noise also appears to concentrate more on innovation than on continuous delimitation.
The new corner of the crypto-universe to catch headlines is decentralized finance (DeFi). There has been a sharp rise in the interest rate on DeFi, with a staggering 1,300% growth in valuation in 2020 to more than 9 billion dollars. Messari's analyst, Ryan Watkins, believes that this is another type of fuel for the growth of the price of Ethereum, as it was in 2017.
The last couple weeks in DeFi have been an absolute bloodbath. But keep in mind bull markets never go up in a straight line.In the 2017 ICO boom ETH pulled back 20%+ seven times before it peaked in January 2018.So far in this bull market we’ve only experienced one. Ryan Watkins @RyanWatkins_ via Twitter
There is a great potential in the developing these applications. Ethereum has been tokenized to use DeFi protocols for just 0.3% of Bitcoin's 216 billion market capitalization, which offers plenty of opportunities to capture more valuable businesses.
This latest surge of enthusiasm and speculation in DeFi has led industry analysts to a mixed reaction, with some citing a period of excitement in the cryptocurrency market, as well as warning that a bubble similar to the 2017 ICO craze is underway.
At the same time, the price of DeFi tokens falls drastically. Some of them have fallen by 80% over the past week. The average yield of all DeFi tokens is around 1%.
The median DeFi asset is down more than 40% in the past 30 days. Take some time to digest this table. Below are a couple takeaways from the data. Ryan Watkins @RyanWatkins_ via Twitter