DeFi's wealth-making carriage

Editor's Note: This article comes fromCoinVoice（ID：coinvoice）, Author: Xiwang, reproduced by Odaily with authorization.

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If we call 2020 the "Year of DeFi," we call June "The Month of DeFi." According to Dapp.com's 2020 Q2 Dapp Market Report, active users of Ethereum-based Dapps doubled in a single quarter, accumulating over 1 million. DeFi applications drove the growth, with transaction volume reaching $5.7 billion in June, accounting for more than 97% of activity on the Ethereum blockchain.

DeFi has brought alive the Ethereum ecosystem on its own, but DeFi's own base is even more fierce. According to the statistics of defimarketcap, the asset scale of the DeFi market has reached 7.43 billion US dollars so far. Behind this data is a green rising curve.

We must know that the DeFi market in 2019 has grown slowly throughout the year and has not yet reached 1.5 billion US dollars. In March 2020, DeFi suffered even more cuts, and the total asset value plummeted from the peak of 1.2 billion US dollars to about 500 million US dollars. It took another three months or so before it returned to around US$1 billion.

In June, the skyrocketing mode was launched. On June 9, it exceeded 2 billion, on June 18, it exceeded 3 billion, on June 23, it exceeded 6 billion, and in July, it exceeded 7 billion. Some old leeks shouted: digital assets are like a tsunami The influx into DeFi is like the ICO of the year.

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The total lock-up of DeFi exceeds 2 billion

Not only the total market value of DeFi, but also the total lock-up of DeFi has repeatedly hit new highs. According to the latest data from defipulse, the total lock-up value of Ethereum decentralized finance (DeFi) projects has exceeded 2 billion US dollars today, setting a new high in history.

In just a few months, the total market value of DeFi in the Ethereum DeFi ecosystem and the total locked positions of DeFi have repeatedly hit new highs. What happened? Here I have to talk about the star project Compund, which was just released in June.

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Star Compound turns the tide

At present, the secondary market that provides COMP transactions has also spread from decentralized exchanges to centralized exchanges. 31 exchanges including Poloniex, Coinbase, Binance, and OKEx have listed the token. In fact, after a closer look at the star project Compund, heavyweight blockchain institutions such as A16Z, Bain, Coinbase, and Danhua Capital sit behind it, and they saw the potential of DeFi early and bet on Compund.

However, COMP liquidity mining itself has a sense of novelty. It is affectionately called “Farming” on foreign social platforms. It has just been launched for a week. Therefore, with the continuous rise of COMP prices, the industry has once again become restless.

Compound also surpassed MakerDao to top the list of DeFi projects in just one week. On the same day, the transaction volume of DeFi DApp reached a peak of more than 600 million US dollars on June 21, and the traffic brought by Compound quickly activated the Ethereum ecosystem.

According to Dapp’s report, prior to June 15, Ethereum had an average of 7,682 daily active DeFi dapp users. Since the launch of the COMP token, this number has grown by 48% to 11,230 active users.

Compound’s trading volume increased 24x from $131 million in the first half of June to $3.3 billion in the second half of June. The number of users has also increased by 3.5 times. In just one month, Compound dominated the DeFI list.

However, corresponding to the trading volume, the market value of COMP ushered in a bright moment within a week of its launch, and the craze returned to rationality. From the initial price of 18.4 US dollars to 377. US dollars, the highest increase of COMP was nearly 21 times. The price is currently down to $182.

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Blockbuster, lots of bubbles

As shown in the figure below, the total locked-up value of DeFi has stabilized at present, and the ability to absorb gold brought by COMP has also begun to weaken. After all, the profit margin of compound has dropped greatly, and the annualized rate of USDT has dropped from 11% to 2.83%. Therefore, COMP rewards are decreasing rapidly.

Messari analyst Jack Purdy also said: When you start liquidity mining, you will receive COMP token incentives, but this incentive is nothing more than a "pseudo-equity" that allows you to share the future potential of Compound. Currently, the platform is distributing approximately $25 million in tokens per month.

According to Messari’s statistics on the use of all tokens in the current DeFi ecosystem, COMP ranks first with a monthly distribution of US$18,576, so it is very attractive to investors at present. However, Compound is a huge lending pool. Due to its scale and network effects, when the rewards are reduced in the later period, the attractiveness of users will also decrease. Therefore, emerging DeFi projects may have skyrocketed in the short term. But when the reward decreases and the bubble fades, it becomes clear who is swimming naked.

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