Several major decentralized finance (DeFi) assets have experienced correction as Bitcoin (BTC) surged this past week. However, the “fundamental” developments continued, “pointing to long-term momentum,” according to a report from OKCoin.
The crypto exchange notes that Bitcoin continued its ascent during the past week. The leading digital currency reached its year-to-date high of around $13,850 — which was quite close to its peak of last year’s rally at $14,000.
While Bitcoin’s price kept rising, Ethereum (ETH) and other altcoins slipped lower. The price of DeFi tokens has also dropped after surging to record-level highs.
Yearn.finance (YFI), a DeFi protocol providing lending aggregation, yield generation, and insurance on the Ethereum blockchain, saw its price drop from around $13,800 to $11,700 (during the past week). The major DeFi token has been negatively affected by the compressed yields being offered in the space, which is due to yield farming tokens declining in value.
Aave’s AAVE, Ren Network’s REN, and Uniswap’s UNI have all seen their prices fall by more than 10% in the past week, according to CoinGecko data. Chainlink (LINK) and Compound (COMP) are among the very few DeFi tokens that didn’t experience a correction.
Qiao Wang, a widely-followed crypto analyst, stated:
“I constantly update my views and unfortunately it looks like there’s going to be more pain in DeFi. Originally I thought we won’t see an 80–90% crash which is typical of alts because of the level of sophistication of DeFi investors but [this] thesis is being invalidated.”
The DeFi space continues to experience challenges as it grows and evolves at a rapid pace. Last week, leading DeFi protocol Harvest experienced an economic exploit that led to the theft of around $30 million worth of stablecoins.
In addition to security issues with DeFi platforms, there appears to be “some inconsistency between developers over how prepared the network is for a release of Ethereum 2.0 — better known as Serenity or ETH2,” OKCoin noted in its report.
Danny Ryan, a researcher at the Ethereum Foundation, has noted that the deposit contract for ETH2 may not be yet ready because of a “pending audit.” Ryan also mentioned that the contract is expected to be launched around eight weeks before the genesis (or first block) of the Ethereum 2.0 chain.
“This library is critical to creating keys, signing messages. Critical, in early phases, [means] that if you use this library, they need to be secure; if you use it to generate your wallets, it needs to have good randomness; and if you are signing your deposits which have a signature associated, it needs to be correct. Given how critical this library is, and given that, if there is a fundamental error in this library we could [really mess things up] in terms of genesis deposits, that is the blocker.”
The deposit contract was supposed to be released this past week, which could have put the planned Ethereum 2.0 launch date “late in November,” the report noted.