Appetite for DeFi Drives Market Rally


The speculation surrounding Amazon’s position on accepting cryptocurrency at the end of last week may well have been a rumor-based market booster, but when Amazon denounced the move, the result was the opposite side of volatility.

This word of mouth-style market making has been very prominent ever since the meme stock craze which began in January, and since the rise of influencers such as Elon Musk.

Since this week’s rise and fall, however, major cryptocurrencies quickly surged back into higher values, gaining a collective $170 billion in value during the course of Monday.

Whilst volatility has become an exciting facet within cryptocurrency trading that has been lacking in other asset classes recently and therefore perhaps a few days of ups and downs are not necessarily out of the ordinary these days, it is the nature of the assets that are now in focus that is particularly interesting.

It is DeFi tokens that led the race back into the green this week, notably AMP, XVS and RSR,LUNA, and KAVA, which are being classified by the analysts as ‘blue-chip tokens’.

Out of the top 20 DeFi protocols, LUNA and AMP were the two biggest price gainers over the past week, having experienced increases of 83% and 64% respectively.

Very interestingly, there has been an increase in activity by cryptocurrency users in Uniswap and Sushiswap in a seven day period ending July 27, causing the price of Uniswap to increase by 17.8% in a week, and the price of Sushiswap to increase by over 21% in the same time period.

This should be an indicator toward the advocacy of the new developments in these protocols, especially that of Uniswap which has become an instrumental part in the development of new generations of that type of solution.

The focus on Uniswap as a DeFi vehicle in institutional fund management is an equally important consideration when prices rise like this, largely because one of the main advancements that have come about as part of the recent introduction of Uniswap v3 is that liquidity providers can provide liquidity with up to 4000x capital efficiency relative to Uniswap v2, earning higher returns on their capital.

Given that this is an intrinsic part of the incredibly empowering and sophisticated DeFi world, it would require a decentralized approach unless a user has access to a L2 via a fiat on-ramp such as CoinMetro.

The sustained increases in the number of new users interacting with DeFi protocols is another sign of the growing interest, as a record number of people going down this route was achieved yesterday.

Until now, the leaders of price rallies after any form of dip have been the established and popular decentralized cryptocurrencies themselves, and of coruse those are still very much the focus as they are the central point of the entire cryptocurrency ecosystem, however in this recent rally, it was Bitcoin and the DeFi tokens that led, hence the interest in DeFi tokens having made its presence clear as the numbers speak for themselves.

There are, as a result, many analysts and investors who are now showing a bullish sentiment toward DeFi tokens and are beginning to anticipate a run of popularity over the immediate future.

This is very interesting in many ways, however perhaps the most important factor in DeFi tokens having become so popular, especially Uniswap and Sushiswap protocols, is that this level of popularity and investment by the community is how the entire decentralized financial services ecosystem will become even more developed and all-encompassing than it already is.

Put simply, you are all part of the formation and participation in a fully democratic, decentralized and comprehensive financial system which will power the everyday lives of people and business into the future.