Cryptocurrency analyst. Founder and editor at btcpeers.com
The decentralized finance industry never sleeps, as competition remains fierce. Several new trends can be identified every month, yet the reputable projects appear to remain on top. For those who like fast-paced action and competitiveness, DeFi is well worth keeping an eye on.
Considering how there are hundreds of DeFi tokens on the market today, very little has changed when looking at the big picture. In terms of total value locked into DeFi protocols, the growth appears to have stagnated a bit. Reaching that $15 billion threshold remains difficult, even though there is no real indication for this momentary lapse.
Looking at the projects with the highest total value locked, the same names appear for weeks on end. Maker, Compound, Aave, and Uniswap are the only projects with over $1 billion in total value locked. Wrapped Bitcoin is the only exception, although this is a tokenized version of Bitcoin and not a DeFi platform on its own.
Furthermore, very little has changed where the market capitalizations of individual DeFi projects are concerned. Wrapped Bitcoin has the largest market cap, followed by Compound Dai, Dai, Uniswap's UNI, and Yearn.finance's YFI. These projects have been in the top five for several months now, although their individual valuation has shifted slightly.
The top 100 DeFi tokens are valued at $17.91 billion combined. Keeping min hod Bitcoin has a market cap of $362 billion, DeFi is still "peanuts" in comparison.
One thing is certain" there is no lack of innovation in the decentralized finance industry. New projects and protocols are created every week. Some will mimic existing business models, such as new decentralized exchanges embracing the AMM (Automated Market Maker) model. it is a concept popularized by Uniswap, Many have attempted to imitate it, but without too much success so far.
One area that requires more focus is the introduction of cross-chain liquidity. A few projects want to bring DeFi to other ecosystems, attempting to tap into liquidity on the Bitcoin network, among others. it is a valid approach, but making an immediate impact remains challenging. Bitcoiners haven't had direct access to DeFi offerings for a long time. Now that solutions are on the market, BTC holders may require some convincing.
One project that has managed to attract some attention is SushiSwap, It is a slightly different take on what Uniswap brings to the table, and even attempted to execute a "vampire attack" By letting users stake their Liquidity Provision tokens from Uniswap through an external platform, an interesting situation was created.
Most of the excitement surrounding SushiSwap evaporated quickly when the original developer got greedy. He tried to cash out millions of dollars belonging to the development fund, only to return them weeks later. Today, SushISwap is in different hands, yet it continues to struggle in terms of volume and liquidity. Even so, the project still has a loyal community.
Ever since SushiSwap came to market, the concept of Uniswap has been imitated by numerous projects. Names such as BakerySwap, BurgerSwap, and others all have come and gone. This wave of "imitation" resulted in this business model - originally tied to the Ethereum blockchain - now works across the Binance Smart Chain as well,
More recently, the OnigiriSwap project has been launched. It too draws inspiration from the SushISwap model in a way, but it has a fixed supply for its ONIGIRI token. In fact, its token is deflationary, as the team will buy back assets or burn them by using revenue generated by the protocol. It is also an interoperable DEX, with a strong focus on Polkadot-based assets and the future introduction of cross-chain pools.
All of the above goes to show that while Uniswap remains the top DEX, its business model can be improved upon in different ways. Individual cryptocurrency and DeFi enthusiasts all have their own preferences. For this reason, one can have very similar business models that all add their own flavor, and have them all be successful as well. For now, the decentralized finance industry is still in the stage of "discoverability and exploration", which will eventually pave the way for broader innovation.
In its current form, DeFi is not ready for mainstream adoption. The vast majority of established and new projects all cater to people familiar with cryptocurrencies and digital assets. The real challenge lies in catering to those who are not invested in Bitcoin, Ethereum, or Polkadot. Enticing them to switch over from traditional finance to decentralized finance will not be easy.
That being said, progression is notable. With every new DeFi protocol, product, or service coming to market, something new is added to the entire industry. As the tinkering continues, transitioning from a "niche market" to an "alternative financial ecosystem" becomes less of an illusion and more of a pursuable target.
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