DeFi Tokens with a Strong Value Proposition and Yield Farming Incentives Continue to Thrive in the Crypto Bull Market

DeFi Tokens with a Strong Value Proposition and Yield Farming Incentives Continue to Thrive in the Crypto Bull Market

By Edward Moon | Analysis From Moon | 2 Dec 2020


DeFi tokens are thriving in the ongoing bull market despite a popular opinion that Bitcoin would yield more returns compared to the new digital assets. In fact, BTC’s dominance is down to 60% while the Total Value Locked (TVL) in DeFi is approaching the $15 billion mark according to metrics site DeFi Pulse. This crypto niche made headlines over the summer as DeFi tokens rallied by thousands in percentage, marking major milestones with Decentralized Exchanges (DEXes) like Uniswap.

The Uniswap DEX is currently the most liquid with a TVL of $1.2 billion; this platform has primarily been the backbone of liquidity pools in the DeFi ecosystem. However, the number one DEX position is now at threat after the project recently sunset its UNI governance token rewards program. Speculators had already shorted this DeFi token but it appears to have lived to its ‘blue chip’ status, alongside other DeFi projects with a strong value proposition.  

While Uniswap yield farms played an instrumental role to incentivize DeFi participation, the development of its rewards scheme has not affected the general activity in DeFi. Instead, stakeholders are moving liquidity to more lucrative ecosystems such as the Sushiswap DEX which recently announced a new liquidity provision scheme. Also, existing DeFi blue chips have started making a comeback in price action and fundamental developments.

Burgeoning DeFi Yield Farms

Even as the crypto market rallies, a significant amount of funds is still staked in DeFi yield farms where returns supersede HODL positions in BTC and other altcoins; of course the risk is much higher in this line of investment. Some of the upcoming DeFi yield farms that investors can realize lucrative APY’s include mainstream projects like Sushiswap and upcoming DeFi blue chips like OnigiriSwap.

The latter is an Automated Market Maker (AMM) protocol built on the Ethereum blockchain; this DeFi innovation runs a yield farming incentive where users can stake on Uniswap to earn its native governance token ‘$ONIGIRI’. OnigiriSwap yield farming incentives are as high as 1800% for some pools and allows for liquidity providers to leverage 3 crypto pairs which include USDC, ETH and DAI.

Like other DeFi governance tokens, $ONIGIRI comes with some perks for the liquidity providers who eventually hodl this digital asset. At the very core, $ONIGIRI token hodlers have voting rights which give them a voice in the development of OnigiriSwap and its tokenomics. Also, they are entitled to rewards based on the network fees collected; this plays as incentive for staking $ONIGIRI pools.

OnigiriSwap’s tokenomics is built on a deflationary model to preserve the value of its native token while incentivizing participation. This simply means that early stakers are protected from the effects of inflation as more $ONIGIRI tokens are released to the market. The current price of one $ONIGIRI stands at $0.00355, this is still 99% away from its ATH during the DeFi craze.

No Longer a Passing Fad

DeFi is no longer a passing fad as critics have called in recent months; well, at least for the fundamentally right projects. This space has grown into one of the most active beehives in crypto as more interest and funds flow to blue chip projects. At the beginning of 2020, the total TVL was struggling to sustain above the $ 1 billion mark; this has since changed with today’s stats comfortably above $14 billion.

Some of the areas that DeFi has been touted as a better option to Centralized Finance (CeFi) include ease of access and the trustless nature of these ecosystems. Unsurprisingly, the sunset of reward programs like Uniswap’s have not triggered a move back to centralized crypto exchanges. Tomo Chain’s chief development officer, Kyn Chaturvedi, recently shed light on this opinion,

“To think that liquidity is going to dissipate and move back to CEXs makes little sense. It’s more likely the liquidity will slosh around DeFi to seek alpha. Why? The trustless, anonymous, easy access nature that comes with DEXs/DeFi works and because Centralized Exchanges have been far less secure with recent high profile hacks and accusations of fraudulent activities.”

Conclusion

If market cycles are something to go by, DeFi tokens are likely to rally massively, should Bitcoin break its All-time High (ATH). This is not to say that all projects will have a share of the cake when it comes to the new funds finding way into crypto. In fact, only a few DeFi projects have rallied in the current bull-run; these are mostly the blue chips and new gems whose hype is mostly short lived. Consequently, stakeholders ought to carry out proper due diligence on prospective DeFi projects before joining any bandwagon.


Edward Moon
Edward Moon

Crypto trader and analyst.


Analysis From Moon
Analysis From Moon

Analysis From Moon

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