Opinion: DeFi tokens are the best-performing crypto assets in 2020

Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley), Author: Lucas Campbell, translation: Liam, reproduced by Odaily with permission.

Editor's Note: This article comes from

Crypto Valley Live (ID: cryptovalley)

Crypto Valley Live (ID: cryptovalley)

• LINK

• MKR

• ZRX

• KNC

• SNX

• REP

• LEND

• LRC

• REN

• NMR

• BNT

, Author: Lucas Campbell, translation: Liam, reproduced by Odaily with permission.

DeFi is soaring, as can be seen from the performance of the top tokens in the field.

Some notable cryptoassets have done well this year, with Bitcoin up 32% and Ethereum up 82%, but the top 100 Ethereum DeFi tokens have a cumulative average return of +237% for the year. The last time we discussed DeFi tokens was in mid-January when we compared the performance of ETH and DeFi versus BTC in 2019. We found that the 6 major DeFi tokens with equal weight - ETH, MKR, SNX, LINK, KNC, ZRX (+550%) substantially outperformed BTC's performance (+86%).

Now, halfway through 2020, we've decided to revisit this topic. This time, we will specifically look at the performance of all the top performing DeFi tokens in the Messari Top 100 and compare them to BTC and ETH. These assets include:

As mentioned above, DeFi tokens have skyrocketed an average of 237% since the beginning of the year. This rise was largely due to Kyber Network’s KNC and Aave’s LEND tokens, which surged 567% and 447% respectively. With the upcoming and highly anticipated Katalyst token upgrade, Kyber will continue to serve as a key component of liquidity in the DeFi ecosystem. Take the example of the on-chain liquidity protocol, which recently reached a cumulative transaction volume of $1 billion, which is an important milestone for Kyber and DeFi as a whole. Aave’s revival, on the other hand, began with the rebranding of EthLend in January 2020. Since then, the EMMA protocol has climbed to $100 million in total market size in just six months.

Ren’s growth comes after DeFi launched RenVM, a decentralized cross-chain custodian. While still in its early days, RenVM has the potential to act as a key liquidity bridge between Ethereum and DeFi and other major crypto assets such as BTC, ZEC and XTZ. In two weeks, the protocol has processed nearly $2 million in cumulative transaction volume and has seen numerous integrations, including the mainnet launch of Curve Finance and WBTC.Cafe, a wireless network that brings Bitcoin to Ethereum via RenVM. licensing mechanism.

Finally, Bancor's notable performance came after the release of Bancor V2 and its new AMM. The liquidity protocol is known for its $153 million ICO in 2017 and boasts the lowest price-to-earnings ratio in the industry, according to Token Terminal. However, in terms of cumulative trading volume in 2020, the liquidity protocol still lags behind its peers. Compared to Uniswap’s $755 million and Kyber’s $562 million, Bancor’s annual transaction volume is only $33 million.

Notably, almost all DeFi tokens included in this group outperformed BTC and ETH. The only three not on the list are MKR, SNX and REP. Maker’s underperformance was largely due to the dilution of Maker in March as the company attempted to recapitalize the system in response to the turmoil that began on Black Thursday. Synthetix’s native token has also had a difficult time this year as the protocol resolves an early issue that disproportionately distorted the protocol’s returns and has cooled off from its 2019 surge (SNX led the DeFi ecosystem with a 3117% gain ). In the end, Augur's poor performance could be attributed to little to no actual usage, as the DeFi community is patiently waiting for V2, a major upgrade to the decentralized oracle and market prediction protocol that will dramatically improve Usability and accessibility.

The good news is that Augur V2 appears to be on the way and is in its final stages.

There is an emerging trend in DeFi where many assets effectively follow the MKR token model: the token is given economic and administrative power over the protocol. This is being called a new crypto capital asset. At the same time protocol teams are getting smarter and many of them are adopting liquidity mining/provisioning as a mechanism for legally distributing tokens to users.

key points

Balancer’s BAL and Compound’s COMP distribution model are becoming textbook examples of how to launch a DeFi protocol and successfully decentralize control (from the protocol team to its community). These tokens are not assigned any economic rights and merely represent voting rights on future governance changes. Even though the token lacks one of the most important value accumulation mechanisms, Compound’s newly launched token has still seen rapid growth in a short period of time on the secondary trading market. In case you haven’t been paying attention, the COMP token crossed $100 on Uniswap yesterday, bringing the protocol’s value to over $1 billion. This is significantly higher than the leading protocol Maker, which is worth about $550 million.

Liquidity mining and managing tokens are just the beginning of a larger trend. From what we understand, UMA will be launching a similar product for its synthetic asset protocol. What few people know is that Uniswap may have a similar move, and the Uniswap team hinted at a native governance token in their V2 announcement. But only time will tell how true this one is.

• secondary title

• key points

• A few weeks ago, Anthony Pompliano outlined that Bitcoin is clearly outperforming traditional financial markets. However, the tweet made no mention of BTC, its discarded cousin ETH, and the dozens of tokenized currency protocols that rely on the network.

• To expand on Pomp’s tweet, here’s how traditional financial assets performed versus emerging crypto assets:

• S&P: 1%

• DEFI：237％

Nasdaq: 2%