It’s been another wild week for decentralized finance markets with Kyber and Aave joining the liquidity race. Markets are also hitting new highs.
Industry stalwart MakerDAO has also made some improvements to its governance model, while Elrond is simply off the chart.
DeFi markets have tapped another all-time high today as total value locked reaches $2.22 billion. In just the eleven days of this month, TVL has surged 31% as investors deposit crypto holdings for token rewards and bumper interest rates.
The long-term chart above shows how DeFi has literally gone parabolic over the past month. It eerily resembles the Ethereum and altcoin craze. If 2017 and 2018 were the years for ICOs, then 2019 was the year of the stablecoin. 2020 must then surely be the year for DeFi.
The big question now is whether that momentum will continue. Can the space become a truly decentralized financial landscape across the globe? Or will it fade out and be replaced by the next big trend in 2021?
Compared to the total crypto market capitalization of around $270 billion, there’s less than one percent locked up in DeFi. In other words, there’s plenty of room for growth both in terms of liquidity and technology.
MakerDAO Adds Price Feeds
Industry leader, MakerDAO, has been tweaking its dominance model as it moves towards total decentralization. According to a recent blog post, MakerDAO has approved four new Light Feeds for its oracles.
The feeds are ‘actors’ that submit price data to the oracles. Essentially they are smart contracts operating on the protocol. The blog post elaborates:
“That price data is then read by Keepers, who trigger liquidations to help Dai maintain its soft peg to the US Dollar. Each Feed queries a set of many different exchanges.”
Maker Governance recently reviewed and discussed the four Maker Improvement Proposals (MIPs) which will improve security and take another step towards fully decentralized governance. The ‘Light Feeds’ will appoint Kyber Network, Infura, Etherscan, and Gitcoin to the platform’s existing oracles.
The oracles are necessary as the Maker Protocol requires market price information to ensure all Dai in existence is adequately collateralized. The Feeds deliver these collateral asset prices to the Protocol from the centralized exchanges on which the wider market prices are established.
Multiple Light Feeds
Multiple feeds are also necessary to ensure there’s a balance and that the prices are accurate. They also act as backups in case one goes offline for whatever reason. Currently, the MakerDAO Feed Dashboard shows prices for seven different collateral assets based on 24 Feeds.
“With each new Feed, the Protocol becomes more decentralized, removing single points of failure and ensuring that robust and reliable data is delivered for the ecosystem’s smart contracts and Keepers to use.”
The feeds are dubbed ‘Light’ because they are provided by publicly-known entities, which are typically significant organizations in the Ethereum ecosystem. Etherscan Product and Strategy team member Elvis Hee explains:
“Etherscan has worked closely with countless projects in providing support to display on-chain and off-chain data. We believe our ethos of neutrality and impartiality will help in providing a reliable source of pricing data.”
Maker is currently ranked second in terms of total value locked according to DeFi Pulse. The TVL on the platform is at its highest level since mid-February with $628 million locked. Since the beginning of July, Maker TVL has surged over 40%.
Token prices have not been so fortunate, declining 35% from last month’s high at $700 to around $455 today. MKR prices are back to the level they were at at the beginning of the year.
Kyber and Aave On Fire
Kyber Network finally launched its KyberDAO staking service on Monday via the Katalyst upgrade. Monday’s launch began the first week of staking for KNC holders, termed ‘epoch 0’. Voting will begin during the second week, ‘epoch 1’, and rewards in ETH will be distributed during the third week, ‘epoch 2’.
At the time of writing $22 million had been staked and the voting reward was 95 ETH according to the platform. KNC prices had retreated from their two year high of $2 last weekend to around $1.60 today.
Flash loan platform Aave has taken a different approach with its credit delegation platform. This allows individuals or organizations such as crypto venture funds or exchanges to define mutually agreeable terms of credit and collateral via legally signed smart contracts.
Credit Delegation may allow Aave to scale DeFi TVL into financial debt markets worldwide if it takes off on a larger scale. Aave is currently fifth in the DeFi charts with a TVL that just tapped a new all-time high of $170 million.
Since the beginning of June, the equivalent dollar amount of collateral surged 165%. Aave’s native LEND token is also on fire, surging to a two and a half year high of $0.22. LEND pumped a whopping 20% on Saturday alone.
Elrond Off The Chart
Proof-of-Stake (PoS) blockchain Elrond has taken off in the last 24 hours as the launch of its mainnet approaches. Elrond architecture merges a Secure PoS algorithm with a so-called Adaptive State Sharding mechanism which enables unlimited scalability, and the ability to process over 10,000 transactions per second.
The mainnet launch is just 19 days away, and a recent partnership with cross-chain token swap platform Swingby has driven ERD token prices sky-high. According to Coinmarketcap.com, ERD surged over 50% on Saturday to an all-time high of $0.013.
Elrond CEO, Beniamin Mincu, highlighted the benefits of DeFi from the partnership:
“Getting access to all the available liquidity from day 1 is an important prerequisite for anyone building DeFi tools. This integration enables Elrond to be part of many existing cross-chain DeFi applications. We’re excited to work with Swingby and increase access to Elrond’s highly scalable and cost-effective solution.”
Elrond and Aave are two of the top-performing crypto assets at the time of writing. It appears that DeFi tokens may be kickstarting a new altseason.
Ethereum, meanwhile, is still slumbering after a failure to break above resistance at $250 on Thursday. ETH prices retreated 4% to return to the $240 level at the time of writing. For now, the sideways momentum continues.