As 2020 comes to a close, it’s a good time to reflect on the biggest crypto developments and the wild ride that the investor sector has taken on.
At the start of the year, Bitcoin (BTC) was hovering just above $ 7,000, and the digital asset at the top had begun to gather steam as the block reward halves approached. Then came the coronavirus pandemic and a sharp correction in the global stock markets that triggered the infamous Bitcoin Black Thursday crash, which saw the price of BTC dive into $ 3,782 on March 12.
While things were looking dark for Bitcoin and the larger global financial ecosystem, the decentralized finance sector was starting to warm up.
An emerging wave of DeFi protocols took glitchy and previously difficult-to-navigate decentralized apps and exchanges, such as EtherDelta, and transformed them into high-yield, high-tech unicorns that gave investors consistently high returns on a regular basis. In terms of total locked value (value of assets committed to the protocol), transaction volume and market capitalization, many DeFi platforms and their associated tokens are now competing against the central exchanges upper.
In 2020, the decentralized ethos of cryptocurrency truly established itself, and decentralized, peer-to-peer trading within smart contracts has evolved to the extent that any investor with MetaMask can easily access a new ecosystem of income generating projects unique passive. wallet and a few dollars worth of BTC, Ether (ETH) or Tether (USDT).
In addition to earning high returns on DeFi tokens, investors were also able to take part in a new form of staking that involves offering someone assets as collateral to crypto and small blockchain startups in exchange for newly mined tokens. Normally, the tickets would immediately gain significant value and provide produce for the stakers, or the farmers. This phenomenon of “product farming” began with the release of Compound’s COMP in June.
The product farming trend symbolized the radical nature of the DeFi space. Some projects were clearly designed to thicken the wallets of their creators by taking advantage of the FOMO and naiveté typical of many new investors in emerging markets such as crypto. For example, a common farming mechanism requires consumers to purchase several existing tickets before getting a product. Due to the tremendous inflationary pressures early on, product farmers often dominate the ticket price action and are themselves the source of the product they are pursuing.
And yet, several world-class DeFi projects emerged and gained prominence thanks to product farming. To date, they continue to grow their communities and offer revolutionary new financial concepts that could change the face of crypto and traditional finance.
Uniswap: One DEX to manage them all
Uniswap, of all the projects that gained prominence in 2020, is arguably one of the fundamental players in catalyzing DeFi’s prosperity. The platform provided a new ecosystem where anyone could create and list a token on the Ethereum blockchain without having to pay listing fees to exchanges or participate in an exchange incubation program.
While Uniswap was launched in 2018 and showed steady growth throughout its lifespan, in 2020, it reached heights that many could not have anticipated. From an average of less than $ 1 million in daily volume in the first half of the year, the protocol accumulated billions in liquidity in “DeFi summer” and peaked at nearly $ 1 billion in volume. Although DeFi’s excitement has subsided since then, Uniswap’s volume figures consistently challenge some of the more established central exchanges.
In a throwback to the days of ICO 2017, Uniswap unveiled a UNI governance ticket on September 16 and highlighted 400 UNI tickets to each wallet that had interacted with the protocol. This “DeFi stimulus check” – so called because it was initially priced at around $ 1,200 – triggered a new buzz of excitement and hype around the project that briefly drove UNI’s price up to $ 8.39 , which corresponds to a pointed value of Rs. more than $ 3,300.
Yearn.finance masters produce farming
As opportunities to gain yields on crypto assets multiplied in DeFi, aggregation services became increasingly necessary for ordinary consumers to maximize their profits.
Yearn.finance and its YFI governing ticket emerged as the gold standard in space, as the team combined the best features of smart contracts and the traditional financial system to create a unique ecosystem of services essential to investors .
Early data shows that the YFI ticket was trading at a price of $ 790 on July 17, but as traders took notice of the project, YFI caught fire and, at one point, saw its ticket price exceed $ 43,000.
Yearn.finance is perhaps the summer’s biggest success story, as its short-product farming distribution has created a tight, decentralized, professional community of developers and consumers. The project eventually hammered the entire DeFi conglomerate by merging with a host of other niche protocols.
The team continues to deliver new and innovative products at breakneck speed while remaining a grassroots and decentralized community.
Aave commendable consistency
Aave is another huge DeFi success story from 2020. Formerly known as ETHLend, Aave was founded with the simple premise of creating a decentralized finance protocol that allows people to borrow and borrow crypto.
Aave was initially launched as part of the ICO’s confusion in 2017 and survived the crypto winter despite a number of challenges. Since its launch, the project has gone through several protocol changes and ticket swaps to emerge as one of the best DeFi competitors.
At the beginning of the year, Lend was trading at $ 0.02 (equivalent to a $ 2 value with the current AAVE token) with a 24-hour volume of $ 10.6 million. Since that time, the price has exploded to peak at $ 95 and 24-hour trading volume near $ 222 million.
According to DeFi Pulse, Aave is the fourth-ranked DeFi locked-in value platform with a current value of $ 1.73 billion supplied by its users.
Throughout the year, Aave was the trailblazer for innovative features in the DeFi lending space. They were the first to supply synthetic parallel versions of relay pool tickets; it released an un-collateralized lending mechanism; and introduced many improvements in the user experience with its V2 platform and AAVE token.
SushiSwap shows that imitation is still the greatest form of flattery
Crypto wouldn’t be “crypto” without a good fork saga, and SushiSwap’s vampire attack on Uniswap is probably one of the most dramatic events of the year.
SushiSwap began by reusing the Uniswap code and hatching a perfect plan: It would only accept Uniswap pool tickets for product farming, and at the end of the farming period, would automatically redeem them and pocket the underlying liquidity for itself. The platform’s SUSHI governance token was designed to customize and manage the associated decentralized autonomous organization, or DAO. Yet the product associated with the ticket farming was still the strongest influence.
A combination of strong popularity and exchange listings drove SUSHI to highs of $ 15 after a $ 0.15 startup, attracting more than $ 1 billion in product farming capital. The ploy was only partially successful in stealing Uniswap’s liquidity as its total locked-in value rose in a lockdown with SushiSwap’s, demonstrating that existing Uniswap liquidity providers are unwilling to make the leap.
In a dramatic turn of events, the project’s lead developer, Chef Nomi, suddenly sold SUSHI tickets worth nearly $ 14 million and announced he was stepping down from the project. SushiSwap users immediately interpreted this move as a rug removal – or exit scam – and TVL plunged the protocol as the price of its governing ticket fell below $ 1.
The agitation from the community eventually convinced Chef Nomi to return the $ 14 million in Ether received from the SUSHI sale, but the damage to the symbolic value and the image of the platform had already been done.
Despite this scandal, the community continued to build the platform out, and the recent merger between Yearn.finance and SushiSwap helped restore confidence in the project despite its rocky history.
The platform currently has $ 1.13 billion of liquidity locked up, and the SUSHI token recently reached a high swing above $ 3.00.
YFII shows that more is not always better
Similar to Uniswap, the YFI Yearn.finance ticket was followed by a host of copy-cat clones trying to ride the coat kiosks of the popular DeFi ticket.
DFI.money (YFII) initially launched as just a fork or copy-paste clone of Yearn.finance, and received the backlash protocol from many in the DeFi community, as the project seemed to lack purpose.
Some exchanges such as Balancer listed the asset because it was issued through Medium by a pseudonym, while the project appeared to have no merit beyond being a clone of YFI. Some analysts compared the argument to the Bitcoin-Bitcoin Cash split, though much less effectively.
An eventual listing on Binance saw a YFII price increase to $ 8,54, and for a moment, traders viewed the ticket as a cheaper alternative to investing in YFI. Like many other DeFi tickets, the price of YFII once plummeted to a strong correction to take profits hit the DeFi sector, and the team’s lack of clear direction and fundamental development has kept the price pinned below $ 2,000.
YFII currently trades at around $ 1,660 with a 24-hour volume of $ 86.5 million. The total locked-in value of the protocol is currently $ 3.8 million, and compared to $ 413.3 million locked in YFI, it has failed to achieve nearly the same success as its parent .
Oddly enough, DFI.money was just the first of many YFI-themed forks – the others were even less successful or legitimate.
It was the same appetite that combined the worst of DeFi
DeFi’s summer, as spectacular and consequential to the ecosystem as it was, was still a time of unreasonable exuberance and excess, and nowhere is it more evident than in Yam Finance.
The project was among the first popular produce farming projects and set the stage for the era of projects named after foods, or “food tickets.”
Most food tickets were low-effort forks, often without even offering any product to talk about beyond product farming – examples include Tendies and Kimchi.
Yam started with what seemed like noble intentions. It was a repeatable algorithmic stabilizer acting as the more established Ampleforth. Its allure was the “fair launch” through product farming, seeking to create a DAO community in a similar way to Yearn.finance.
Yam was one of the pioneers of the “round pool” concept, where some farmers had to first buy 50% of the value of their capital at YAM tickets to receive more YAM tickets as a product. This, coupled with the promise of a fair launch, triggered a frenzy of interest and activity among wide spans of the community.
The protocol collected hundreds of millions in capital, but there was one fundamental flaw: The smart contracts were never tested, much less scrutinized by a professional team of security researchers. Although the founders made it clear, it did not somehow deter the farmers – much to the chagrin.
The project developers made one fatal flaw – they forgot to divide by 10 to power 18. Ethereum smart contracts use very large integers to represent decimal values, requiring developers to multiply and divide by this factor when performing calculations .
So the first repayment of the project created a huge number of new coins that went all the way to their treasury. This made it impossible to reach a voting quorum and closed the protocol – the bug became unreadable.
Yam subsequently relaunched, but did not reach the same height as during its initial phase. The experience completely reminds us of how things can go wrong at DeFi.