For the crypto and blockchain community, the summer of 2020 would be best remembered for the stellar rise of the DeFi ecosystem. At present, the total value locked in DeFi is a whopping $12 billion, speaking of enormous growth since last year. But, with winter approaching, it seems the DeFi craze has cooled down by some extent of late. And the limelight is once again back on the #1 cryptocurrency Bitcoin which has taken the world by storm with its stellar growth over the last 6 months.
Bitcoin rising high
As per the market reports, Bitcoin has witnessed a solid 50 percent growth since the initial quarter of September this year. In November only Bitcoin rose to $14,000 and then followed with an even higher $15,000+. Experts are of the opinion that the coin is poised to touch %16,000 by the end of this year, if not touch its 2017 ATH. However, a large section of the crypto community is expecting Bitcoin to touch or even cross its ATH by the middle quarter of 2021. A major reason cited here is Bitcoin halving in the month of May this year. Bitcoin reached its ATH in 2017 after 15 months of Bitcoin halving in 2016. In that light, experts are expecting another Bitcoin peak in the coming year as well.
After months of huge craze, the DeFi scene seems to be encountering a sharp decline of late. The DeFi scene has surprised investors with incredible triple-digit returns this year but it’s only after it reached the peak that it started to tumble downward. As per the latest reports, the DeFi Pulse Index is down by 26 percent. Then, the DeFi Index Perpetual Futures by Exchange FTX is also down by 42 percent since the last couple of months.
As per many market experts, it’s no surprise to see the DeFi craze cooling down at the moment. A good bunch of tokenomics for Decentralized Finance protocols are built on gambling or farming and hence always bore questions of longevity.
Then, experts have also highlighted the poor infrastructure of several DeFi projects as a key reason behind the steady decline in the DeFi today.
“A number of DeFi projects are based on poor infrastructure which has eventually failed to provide the desired ROI to investors. Then, you have the problem of hackers. Decentralized exchanges, a good bunch of them, are not really strict about checking users’ identities while allowing user registration and that’s making things easier for unscrupulous users. No wonder, money laundering is at an alarming high at these exchanges today”, stated Sina Estavi CEO of rising oracle system Bridge Oracle.
On the other hand, in spite of the DeFi cool-off, around $360 million in BTC has been shifted to Ethereum last month. It’s to stress here, the scale of BTC tokenization has surpassed the rate of mining issuance over the last three months. WBTC (Wrapped Bitcoin) is the biggest tokenized BTC project of late, controlling more than 80 percent of the market.