VALUE TAKEOVER HAS BEGUN / Ethereum DeFi on track to become a "liquidity black hole" - the most relevant in DeFi & stablecoins

VALUE TAKEOVER HAS BEGUN / Ethereum DeFi on track to become a "liquidity black hole" - the most relevant in DeFi & stablecoins


                  THIS IS THE MOST RELEVANT IN DeFi & STABLECOINS

 

The data shows that the absorption of crypto assets into DeFi, mostly Ethereum-based apps, has already started.

 

According to the data site Defipulse.com, there is now a value of $ 951 million (ETH, stablecoins, Bitcoin, etc.) blocked in DeFi applications. This equates to approximately 0.35 percent of the entire cryptocurrency market, assuming that Bitcoin and all alternative currencies have a cumulative value of $ 270 billion.


The cumulative value of Ethereum-based stablecoins has increased more than 200 percent since the beginning of the year alone.

ETH will greatly benefit
As CryptoSlate reported, all smart contract blockchains have their own stake in the DeFi ecosystem: Tron has SOLO, Bancor operates on EOS, and even Bitcoin acts as a transaction medium for crypto exchange and financial services company Abra .

But Ethereum, and ETH by extension, are likely to benefit more from DeFi.

Furthermore, the leading applications in this sector are only actively used by a few thousand individuals. DappRadar reports that over the past week, decentralized trading and stablecoin platform Synthetix have transacted with 2,000 individual wallets, while that same figure is only 984 for MakerDAO.


Decentralized Finance (DeFi) may be one of the most important use cases for cryptocurrencies, but as it stands, its adoption has been limited.

Despite this, top investors and analysts in space see a lot of potential in DeFi. So much potential that some have called this part of the cryptocurrency world a "black hole" for liquidity and the value of digital assets.

Ethereum DeFi on track to become a "liquidity black hole"
While DeFi has been subject to a number of attacks and vulnerabilities over the years, faith innovators and investors in this crypto subsector have continued to grow.


This is a comment made by MakerDAO founder Rune Christensen.

The DeFi pioneer explained that the recent growth in its protocol really "shows the latent demand for non-ETH assets, and is the start of a broader trend for DeFi acting as an economic vacuum that will eventually attract almost all of the value of the Ethereum blockchain. "

The idea is that, because of Ethereum's smart contract systems, which effectively allow anyone to encode anything on the blockchain, the network has "infinite use cases." This market opportunity gives Ethereum the opportunity to capture more than $ 80 billion in value, according to Andrew Keys, managing partner at Digital Asset Risk Management Advisors and a former ConsenSys executive.


Cryptocurrency lending platform Nexo last month minted four million DAI tokens with Bitcoin wrapped, an Ethereum-based asset that is created by depositing BTC through a custodian account. That is, WBTC is a symbolic representation of BTC on Ethereum, allowing its use within smart contracts.

In addition to this, stablecoins have started to quickly populate the Ethereum network.

Ryan Watkins, an analyst at crypto research firm Messari, found that there are now around $ 7 billion in stablecoins, such as Tether's USDT or Coinbase and Circle's USD Coin from blockchain.

"In the last two years there has been a complete transformation in the way value is stored and transferred on the Ethereum blockchain," said Watkins of the growth in the value of stablecoins and ERC tokens.

Ryan Selkis, CEO of crypto researcher and data provider Messari, explained that the introduction of this use case gives ETH a "higher ceiling" than 2017/2018 to move towards the next cryptocurrency market. For reference, the asset reached $ 1,400 in 2018 and a BTC price of around 0.12.

However, it is important to note that Ethereum is unlikely to be successful without the introduction of scale enhancements ...

 

 

 

 

The wallet maker Wallet Ledger gives users access to the Deversifi DEX.

 

Decentralized finance continues to expand
Ledger users can now access DeFi markets.


Ledger became the first hardware wallet integrated into DeversiFi, a decentralized exchange (DEX), which marks Ledger's move into the DeFi ecosystem.

Ledger, a leader in helping users securely store their digital assets, announced an integration with DeversiFi, giving merchants an edge in fast-moving decentralized finance (DeFi) markets.

Users will be able to connect their hardware devices directly to the DeversiFi platform

They will have the ability to trade without intermediaries, confirm transactions, and sign messages directly from the hardware device.

Ledger users will have access to high-speed transactions, instant settlement, and deep liquidity by professional cryptocurrency merchants through integration, while retaining full control of their encryption assets and private keys.

These additional benefits offer users the same comfort and ease of use that are generally found in centralized solutions.

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The cryptocurrency market is picking up, and with Bitcoin's growth after a big drop in March, many of DeFi's tokens are feeling better, too. For example, some DeFi projects like Bancor, Eidoo, Celsius and xDai (STAKE) have doubled in price in the past month. Here are five of the top 10 DeFi project tokens, based on price performance in May.
During the month of May there was a growth in DeFi tokens. In an analysis shared by Generation Crypto, it reflects the price increase that some projects such as Bancor, Eidoo and Celsius have had.

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Despite the slips and starts, rising digital asset prices have helped the DeFi space regain more than $ 1 billion in value.

 

Most of the value locked in DeFi is made up of Ether and stablecoins.


Ethereum's DeFi is back at $ 1 billion of blocked value with MakerDAO representing more than half of this amount. Another notable growth of Aave and Set Protocol continue to reinforce the value of DeFi as well.

DeFi driven by rising prices
As DeFi emerges from improving sentiment in the crypto markets, lending protocols and decentralized exchanges prosper as speculative activity grows.


The 85% ETH price appreciation since April 2019 could be the main driver of this increase as more traders use lending protocols to increase their leverage in spot market positions.

Aave - A flash lending platform, it has seen tremendous growth, with total liquidity increasing from $ 20 million in March to over $ 80 million as of this writing.

The growth of the protocol is the result of offering borrowers the option of taking out a loan at a variable or stable rate. This mechanism, in part, has driven higher interest rates for Aave.

Set Protocol: An automated investment protocol on Ethereum, grew from less than $ 2 million of blocked value to more than $ 15 million in six months.

Uniswap and Bancor: They have also released updates to their protocols in recent months. These decentralized exchanges (DEX) face stiff competition from Balancer, which launched approximately two months ago and already has more than $ 12 million in liquidity.

optimism for the DeFi Ethereum stack continues to grow.

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90% of supply for most DeFi tokens is held in less than 10% of addresses.

LINK is the least concentrated currency as the token investor base expanded as it experienced a price appreciation.
MKR supply is concentrated in less than 1% of all directions, jeopardizing its token-based governance model.
The concentration of utility tokens is the result of initial adoption and high conviction whales that double their bets.

 


Token concentration is not always bad
Utility tokens tend to accumulate for users who actively support the network. For networks that are still grappling with adoption, the number of operators on the network is limited. The supply of tokens tends to flow to these few operators, who distribute it based on their investment thesis and the demand of market participants. Token concentration is a direct result of new tokens accumulating for these few users.

Just like the supply of BTC is aimed at users who secure the network through mining, Chainlink node operators receive LINK for acting as data oracles. Kyber booking operators are paid at KNC to provide liquidity.

Excluding network operators, whale accumulation has always been a sign of bullish momentum in crypto, as long-term accumulation reduces supply on the open market, thus applying upward pressure on prices. High conviction whales also contribute to the chip concentration.

This narrative is valid for ChainLink, Kyber, 0x, and Bancor, all of which are utility tokens. Maker (MKR), however, is a different story. Since MKR is a governance token used to participate in executive votes on the MakerDAO, concentration means that a small number of participants can control the proposals and the direction the protocol takes.

Concentrating supply for any governance token puts decentralization of the protocol at risk.

Most utility tokens do not offer control over the protocol, at least not without a DAO that facilitates token voting. Instead, governance is largely community-driven, although these communities remain small, making some degree of centralization inevitable.

The token concentration phenomenon can be seen in most crypto networks and its removal will occur organically as more investors and active participants in the network appear.


but we cannot deny that
Token supplies for the main DeFi protocols are centralized among a small fraction of the super-rich holders. Chainlink, Kyber Network, MakerDAO, 0x Protocol and Bancor have worrying levels of token concentration. For some of these protocols, this could be disastrous.

Analyzing concentration
Chainlink, Kyber Network, MakerDAO, 0x Protocol, and Bancor are some of the top names in DeFi's popular niche. These protocols have collectively grown immensely since 2019. While the ultimate goal of these protocols is to decentralize financial systems, their tokens are highly concentrated in the belly of whales, jeopardizing this goal.

There is a similar trend with all five protocols: Coins are well distributed in various directions after the initial token sale. But after some time, usually a few weeks or months, the tokens start to accumulate in some directions.

Two months after LINK ICO, 35% of addresses represented 90% of LINK's supply. LINK concentration steadily increased, with 15-20% of addresses for most of 2018 and 2019. As of May 2020, 11% of LINK addresses had 90% of LINK tokens.

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THANKS FOR READ 

 

sources:

Defipulse.com

https://es.cointelegraph.com

https://cryptoslate.com/

https://cryptorank.io/news

https://cryptobriefing.com/

https://www.ledgerwallet.com/

 

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