After experiencing a strong correction earlier this month, leading decentralized finance (DeFi) tokens have been able to recover strongly, OKCoin reports.
The San Francisco-based crypto exchange notes that DeFi tokens crashed in late-October 2020 and were performing poorly earlier this month as investors appeared to have moved funds out of altcoins and into Bitcoin (BTC), the flagship cryptocurrency. OKCoin also claims that buying pressure seems to have returned as the “fundamentals” of the crypto space keep getting better.
As mentioned in the exchange’s report, Yearn.finance’s YFI, Synthetix Network Token (SNX), and Aave’s AAVE are among the digital assets that surged over 100% from their recent lows. YFI had been trading at around $7,500 at its lows, but it’s now trading at around $17,800 at the time of writing. As confirmed in the report, “at the local highs, the token reached $19,000, as per OKCoin market data.”
The report further noted that on-chain data and “anecdotal” comments indicate that there’s been an “influx of institutional capital” into the DeFi space. According to the exchange, investors “realized that the valuations many tokens were trading at last week were significantly undervalued by the standards of the summer rally.”
Qiao Wang, a widely-followed crypto analyst, compared the recent increase in DeFi token prices to a “game of chicken,” where most of the investors or traders were reluctant to take positions in DeFi on the way down but didn’t hesitate to buy when they saw “the slightest flash of green.”
“Recap of what I think happened. The mindshare of every informed alt (altcoin or all cryptos besides Bitcoin or BTC) player was on DeFi. But everyone was too afraid to buy on the way down. A game of chicken. Then everyone piled in on the first sign of strength. Today many are still in disbelief. But all mindshare is on DeFi.”
According to the report, DeFi appears to be “primed to continue its ascent as the fundamentals of this space are stronger than ever.” It added that “following Bitcoin and Ethereum higher, top DeFi tokens surged massively off their lows this week.”
The report also noted:
“LINK (Chainlink) is now trading on OKCoin, [after Chainlink has now been integrated with nearly every crypto platform.] … Institutions played a key role in this reversal, deploying sidelined capital into coins such as YFI and AAVE. Many DeFi coins such as YFI, AAVE, and SNX have gained 100% or more from their local lows.”
The report confirmed that total cryptocurrency locked in DeFi reached $13 billion and has surpassed $13.5 billion at the time of writing (according to DeFi Pulse data). According to OKCoin, iInvestors are now “keeping a close eye on the second-order effects of Uniswap’s liquidity mining scheme ending.”
Ethereum token exchange Uniswap has managed to reach $3 billion worth of liquidity, meanwhile, Maker (a major decentralized lending protocol) recently surpassed $2.3 billion in total deposits, the report confirmed. Wrapped Bitcoin (WBTC), which offers a way to transfer (tokenize) Bitcoin to Ethereum, has nearly $2 billion worth of BTC locked.
OKCoin points out that these three leading players (Uniswap, Maker, WBTC) in the DeFi market are responsible for most of the “growth” seen in the (total value locked) TVL into DeFi smart contracts.