Is DeFi Gold Rush Just Getting Started or Are We at the Peak?

Is DeFi Gold Rush Just Getting Started or Are We at the Peak?


Since Compound Finance distributed its governance token $COMP earlier in July, DeFi has grown to become the hottest sector within the entire cryptocurrency industry. In fact, there are now 10 DeFi projects that have already entered into the top 50 ranked projects over the past fortnight.

The total USD value that is locked up in DeFi smart contracts has also exceeded $3.00 billion as of July 21, 2020;

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It is quite surprising how quickly DeFi reached the $3 billion level. Following is a quick breakdown of how short of a period it took to reach each billion Dollar milestone -

  • $1 billion - 31 months - The first billion took the longest to achieve. It took around 31 months to go from $0 locked up in DeFi to reach the $1 billion milestones in February 2020.
  • $2 billion -  4 months - The second billion then took a total of 4 months to reach from February 2020 to July 1st, 2020.
  • $3 billion - 21 days - It took a mere 3 weeks just to reach this latest $3 billion milestone for DeFi.

Is it Just the Beginning? 

In short, absolutely!

This is just the start of the show. All the DeFi platforms that you see today are pretty much in their infancy stages despite the fact that their corresponding tokens are surging quite significantly. 

You can see the acceleration of growth for DeFi by just seeing how the industry grew from $2 billion to $3 billion - as it took just a short 21 days.

New DeFi services Surpass Poloniex & Bittrex in Volume

We are now in the stages where DeFi services that have only been around for a few months are starting to take over established exchanges such as Poloniex and Bittrex. You might have heard about these two exchanges are they are most certainly two of the maturest centralized exchanges around after being established in 2014 and 2013, respectively. 

It has taken approximately 6 years for these two exchanges to reach the daily trading volume levels that reach around $30 million;

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On the other hand, new projects like Curve.fi have managed to come and surpass and double the daily volume of these established exchanges in pretty much no time;

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Curve Finance is a DeFi service that allows users to easily swap stablecoins for one another with very low fees and extremely low slippage. Curve.fi does not match buyers and sellers like typical exchanges, instead, it uses liquidity pools such as Uniswap to conduct the swaps on-chain. 

Because Curve.fi focuses solely on stablecoins, it can allow trades to happen with minimal slippage. On other services such as Kyber Swap or Uniswap, token-to-token swaps are expensive because the ERC-20 token has to be swapped into ETH and then into the other ERC-20 token on the other side of the trade which adds more fees.

It only opened its doors in February 2020 and it has been able to surpass 6-year-old exchange heavyweights in trading volume during a short 6 month period.

Why is it happening? 

So, why is all of this happening at such an extraordinary rate?

Well, we have to take a step back and take a look at what is actually going on behind the scenes.

You see, centralized exchanges (CEXs) were the first type of exchanges in existence for the cryptocurrency industry. These platforms allowed users to deposit funds to trade cryptocurrency in a very quick and easy manner. However, they were subjected to major hacking scandals over the years which leads to lots of users losing their funds. Most importantly, it was only a few people that would be able to eat the profits from the trades at the centralized exchanges. These were typically the company that owned the exchange and a few large scale liquidity providers.

On the other hand, decentralized exchanges (DEXs) immediately combated the problem of large-scale hacking theft as all trades were facilitated directly from user’s wallets which meant that they were always in control of their funds. In addition to this, the DEXs like Curve.fi allowed anybody to capitalize on the new mechanisms of decentralized finance as any user can deposit funds into the liquidity pool and benefit from the fees. 

The shift from CEX to DEX will continue over the following month as users realize that DEXs are run by the community and they can offer much lower fees. Most importantly, they will also realize that DEXs are permissionless and require no KYC or AML compliance to overcome before trading. Just connect the DEX to your MetaMask wallet and nobody will ask you any questions - you don’t even need to provide a name to trade on DEXs.

What Are Some Still Undervalued DeFi Players to Put on Your Radar?

So, the ever-burning question is what should you put on your radar?

Well, firstly, I do not want to recommend any projects that have already been in the spotlight for too long such as $COMP or $LEND (Aave).

Here are three important projects that I think you should keep your eyes on for the next few weeks;

Thorchain - $RUNE

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What's so special about Thorchain?

Thorchain is a cross-chain permissionless network that allows for instant token swaps between ERC-20 tokens, BEP-2 (Binance Chain) or Bitcoin. 

On top of all of this, the Thorchain team is one of the most consistent teams in the cryptocurrency space. They recently celebrated their first anniversary;

The amazing thing about this milestone is the fact the team have managed to push regular developmental updates every week throughout the entire and recently released the 52nd update;

Furthermore, another great thing about Thorchain is the fact that it still only has an $82 million market cap value which puts it in the ~226th ranked position - this shows how much room it has to grow.

We are not late to the party at all with ThorChain as the coin continues to rise;

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Looking at the chart above, we can see that RUNE started to increase during June as it broke above the $0.12 level and headed higher into the resistance at $0.48. RUNE just broke this resistance very recently in late-July as it heads higher to the current $0.51 level.

Where to buy $RUNE

The best place to be trading RUNE right now is probably on BinanceDEX.

Ampleforth - $AMPL 


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What's so special about Ampleforth?

Ampleforth is the first of its kind in the entire cryptocurrency space - let alone DeFi. The tokenomic model of Ampleforth sees the supply of the currency increasing or decreasing depending on the demand. 

This elastic supply gives two axes of variables making Ampleforth a Multi VAriable Asset (MVA) as both price and supply can vary. For this reason, $AMPL markets typically should not trade according to the typical technical analysis rules.

Instead, traders will need to develop new metrics to track overtime to come with new strategies. In Ampleforth's case, it is important to track its total supply as it also determines one's ROI. 

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This chart shows the expansion of the $AMPLs total supply since late April 2020. 

As you can see, the total supply of AMPL was iron board flat for the longest period until it started to move toward the end of June 2020. Interestingly, this is when AMPL launched its incentive programs called the Geyser to allow users to compound gains from the liquidity provided at the AMPL/ETH Uniswap V2 pool.

Since releasing the incentive program, AMPLs supply keeps expanding as its oracle price stays above $1.06 since that day. This puts Ampleforth in the top 50 projects listed on coinmarketcap. 

If you are looking for some levels of support and resistance to keep your eyes on, I do have some analysis for you. However, I MUST stress that the traditional technical analysis should not work as well for this unique asset;

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Looking at the chart above we can see that AMPL was rangebound between $1.50 and $0.60 for the majority of 2020 until the end of June when the coin started to surge much higher. In July, we can see that the coin reached as high as $3.80 before it rolled over and fell lower. 

It went on to drop into the support at a .886 Fib Retracement where it rebounded aggressively.  This week, AMPL attempted to break above $3.00 but has turned away from this resistance today.

Looking ahead, if AMPL can climb beyond $3.00 again, resistance will be expected at $3.40, $3.64, and $4.00. This is followed with added resistance at $4.35, $4.50, and $4.86 - if it does ever manage to get that hight (remember it is meant to be as close to $1 as possible).

On the other side, support for AMPL can be found at $2.71, $2.50, $2.25, $2.00, $1.85, and $1.50.

Where to buy Ampleforth

$AMPL can be bought at Uniswap. Simply connect your MetaMask to the DEX and conduct the swap. 

META - $MTA


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What's so special about Meta?

Meta is very new to the entire DeFi realm as it just launched in May 2020. It is a product of the mStable protocol and it is designed to unite stablecoins and allow for lending, borrowing, and swapping in one platform. It can be thought of as very similar to Curve.fi, however, the key difference here is the fact they offer token swaps with 0 slippages.

The Meta token is the protocol token for mStable. It is designed to be used as the ultimate source of collateral, to be used in mStable protocol governance, and to incentivize the bootstrapping of mASSET liquidity.

The token has only been live for a few short days - so, obviously, there is no need for me to give you some analysis as it would be worthless. However, even though it has only been alive for 2 or 3 days, the project has managed to garner a strong sense of hype. If this is true, I can see Meta following in the footsteps of Curve.f in terms of adoption which will most certainly lead to a bright future for MTA.

Where to buy Meta

MTA can be purchased over at Uniswap. It is important for me to point out that you will need to add the contract address for Meta Token manually for the token to show up in your wallet.


CryptoChartWizard91
CryptoChartWizard91

I dont *always* make good predictions, but when I do they're the best


Crypto Chart Wizard
Crypto Chart Wizard

My personal opinions and analysis of my the crypto projects that I follow. Not a financial advice.

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