The rapid increase in popularity and the remarkable growth in investments in the sector of decentralized finance (DeFi) are largely reflected in the price tables for DeFi and return-related tokens such as Yearn.finance (YFI), Aave (LEND) and others, which constantly gather this year 2020 heights. Only 10 times since post.
In fact, most DeFi-related tokens have long outperformed Bitcoin (BTC) and other digital currencies. Even management and infrastructure projects such as Chainlink (LINK) and UMA, where the latter became one of the largest DeFi protocols in September, have been marred by DeFi tokens.
With all the focus on DeFi companies and smart contract platforms such as Ethereum (ETH) and Cardano (ADA), it seems that some sectors in the cryptocurrency world have been abandoned. The most notable are public payment platforms such as XRP and Stellar (XLM).
While smart contract platforms like EOS have had modest success, they have not been able to keep up with competitors like Ether, which has been the center of DeFi 2020 craze (since most DeFi-related tokens are Ethereum ERC20 tokens).
Ripple loses the appeal
Among the top 10 currencies by market value, XRP was one of the worst currencies in 2020, and recently lost its position as the third largest digital currency for Tether (USDT). Ripple is currently the fourth largest cryptocurrency with a market value of around 10.6 billion dollars.
Although XRP is up 20% since the beginning of 2020, it is far behind Bitcoin and many other altcoins. In a Q2 report from Binance, the stock exchange XRP proved to be the 5th worst cryptocurrency on the platform.
There were also several public issues related to the project, such as a lengthy lawsuit related to the marketing and sale of the XRP token. Ripple is also facing a lawsuit based on the use of the PayID trademark. Recently, Santander, one of Ripple’s most important banking partners, raised concerns about the transition to One Pay FX, Ripple’s international payment network.
While the situation looks bleak for XRP, there are some positive signs of the project, such as the increase in on-demand liquidity, which has handled more than $ 2 billion in transactions since launch and posted 11x growth in the first half of 2020. compared to the first half of 2019.
There are also plans to get closer to the DeFi room with XRP partner Flare Networks announcing a project to bridge the Ripple and Ethereum blockchains.
Privacy coins are also left behind
Cross-border payments do not seem to be a hot topic for cryptocurrencies at this time, given the speculation surrounding DeFi and the increase in the use of stablecoin. However, there are other pockets that failed to function as DeFi or even Bitcoin, including privacy coins.
Bitcoin has surpassed many privacy currencies in the market, according to data from Messari, a digital data processing company, although popular currencies such as Monero (XMR) and Zcash (ZEC) have shown modest gains over Bitcoin in the last 12 months. … Approximately 5% and 20% respectively.
The tables will turn over when the DeFi bubble bursts
While DeFi-related tokens gave owners a significant profit in 2020, mania has also created many clone projects and memes that have taken advantage of the hype.
The value of some tokens in the DeFi sector has fallen, including SUSHI, whose main market for developers has sold many tokens, which some believe is an exit scam. Another DeFi meme token that has resonated in the media lately is Hotdog. The food stamp token lost 99% of its value within 5 minutes, leaving many investors with useless sausage packages.
While DeFi has left other sectors of the crypto space, users should be aware that many of these new projects have little to offer as they remind us of the ICO space in 2017.
As such, the DeFi sector may soon follow the same steps, especially as the Ethereum blockchain is still congested. If this happens, it is likely that bitcoin profits will return to fiat / stablecoins or other cryptocurrency sectors that have been left out by the current hype.
On the other hand, DeFi has hardly slowed down anytime soon, especially as it continues to develop highly profitable automated strategies.
In the future, some of this profit is likely to return to bitcoin and altcoins when investors look for “safer” assets to earn interest. Thus, there is no need to develop new scenarios for non-DeFi currencies and networks.