In recent days, from DOGE's rise of 1000% in two days, to Musk's platform, Bitcoin rose by 20% in a day, which is a good show.
DeFi, which is on the top of the list, is not far behind. Its leading projects have shown strong upward trends one after another. UNI, AAVE, SUSHI, etc. have repeatedly set new highs. The DeFi sector once again attracted market attention.
TokenInsight data shows that as of 18:00 on January 31, the total lock-up volume of the DeFi ecosystem has risen to 37.97 billion US dollars. In addition, the number of contracts with a locked position of more than $1 billion on Ethereum has reached 10.
With the continuous influx of assets on the chain, it is expected that DeFi will continue to be extremely popular this year. Not long ago, Messari CEO Ryan Selkis tweeted that DeFi is crazy. This is the fastest growing real innovation I have seen since entering the crypto industry. He believes that the period from 2009 to 2015 is about the construction of Bitcoin infrastructure and the connection to the "real world"; the period from 2015 to 2019 is about the connection of the Ethereum network infrastructure; after 2020, most of it is DeFi.
From the rise to prosperity, DeFi has become a new narrative in the blockchain world. However, the report released by ConsenSys pointed out that as an industry, DeFi is still in its infancy. After more new innovations appear, its accessibility and variability may be further improved.
Rallying "sultry", security is worrying
In 2020, DeFi will suddenly emerge and detonate the market. In 2021, this craze will intensify.
TokenInsight data shows that the total lock-up volume of the DeFi ecosystem has exceeded US$22 billion by the end of 2020 from less than US$800 million at the beginning of 2020, a growth rate of more than 2650%. The total market value of DeFi projects reached 19.6 billion US dollars, a 12-fold increase. By 2021, the momentum of the influx of encrypted assets into DeFi will continue to increase. As of 18:00 on January 31, the total lock-up volume of the DeFi ecosystem has risen to 37.97 billion US dollars.
Trend chart of DeFi total lock-up volume in the past 90 days
DappRadar data also shows that in 2020, there will be 106 new DeFi DApps in Ethereum, accounting for 44.54% of the total increase that year; 132 DeFi DApps outside of Ethereum will be added, accounting for 55.46% of the total increase.
However, under the outbreak of DeFi, it seems a lot like a chaotic Warring States era. Tens of billions of dollars of virtual currency assets are locked in these DeFi projects. For hackers, it is undoubtedly a piece of fat that will make them rush.
According to the "Paidun 2020 Annual Digital Currency Anti-Money Laundering Report", there were 60 DeFi attacks and losses of more than $250 million. Among them, at least 10 were lightning loan attacks, including bZx, Balancer, Harvest, Akropolis, CheeseBank, ValueDeFi, and OriginProtocol and many other DeFi projects were attacked, and at least 5 were reentry attacks, including Uniswap, Lendf.Me, Sushiswap, Akropolis, OriginProtocol. Among them, in October 2020, the loss of DeFi attacks reached 33.8 million U.S. dollars, which was the month with the most losses caused by DeFi attacks in the whole year; in November, there were 10 DeFi attacks, which was the month with the highest attack frequency in the whole year.
This shows that the current DeFi project is like walking on thin ice. In view of the current DeFi security situation, Paidun suggests that, on the one hand, it is necessary to conduct a comprehensive and professional smart contract security audit before going online to investigate various known vulnerabilities; on the other hand, pay attention to the investigation when combining with other DeFi products Business logic loopholes to avoid cross-contract logic compatibility loopholes.
At the same time, most importantly, it is necessary to design a certain risk control fuse mechanism and introduce threat perception intelligence and data situation intelligence services from third-party security companies to respond to security risks as soon as possible, and to detect and block security attacks in time. When an attack occurs, all parties in the industry should be linked to build a complete asset tracking mechanism. After the attack occurs, it is necessary to check for deficiencies and improve the defense system.
Ethereum's only file, latecomers are rushing
Although Ethereum has led the DeFi trend, from the perspective of development trends, major public chains and leading exchanges have proposed their own solutions to problems such as insufficient assets and high handling fees.
In the public chain, the DeFi projects on Polkadot and EOS are already very rich. The former has outstanding performance on DEX, aggregator and other tracks, and the latter has gradually taken off from "spinach" games to DEX. Competitiveness.
Among the exchanges, especially the three major exchanges, they have built their own DeFi zones and deeply participated in the construction of the DeFi ecosystem.
As for Binance, the Binance Smart Chain (BSC) was officially launched in September 2020, and then announced that it will provide 100 million US dollars in funding to support developers. As of January 12, 2021, there are currently more than 100 projects using Binance Smart Chain. Including liquid mining swap, wallet, NFT, oracle, decentralized identity, payment, etc.
In terms of Huobi, on December 21, 2020, the Huobi Eco-Chain Heco was officially launched, and the Heco Ecological Special Fund was established to focus on supporting high-quality projects such as DEX, lending, oracles, cross-chain solutions, and insurance on the Huobi Eco-platform. .
In terms of OKEx, OKExChain is positioned as a high-performance decentralized transaction public chain. Unlike BSC and Heco, OKExChain’s native assets do not use OKB, but instead newly issued native assets OKT. Cross-chain gateways and DEX products have been launched.
Analysts believe that Ethereum's leading position as a smart contract platform is currently difficult to shake, and due to the rising gas fees of Ethereum, the extension of DeFi has become inevitable. At the same time, Ethereum 2.0 has brought new breakthroughs and unlimited imagination.
"DeFi has formed a rich industry ecology and will have an impact on the old financial landscape in the future." OKEx CEO Jay Hao said on Weibo that DeFi as a new thing still has many problems, such as the performance bottleneck of the underlying public chain. Liquidation risk, adverse selection of project homogeneity, asset loss caused by contract loopholes, etc.
In addition, Lin Zihao, founder and CEO of Candaq Group, recently stated that there are "three mountains" in advancing the development of Defi. One is the throughput of blockchain technology; the other is how to connect assets of different systems. This is the future of Defi. The world is a very important link; the third is the collision of virtual and reality. There has also been a trend this year. The value of assets on the chain will begin to adjust proportionally to that of the off-chain, and there will even be a process of off-chain in the near future.
The first month welcomes a "good start", fundamentals continue to improve
“At the end of 2021, 60% of the top 30 currencies will be DeFi projects.” Du Jun, co-founder of Huobi and founding partner of Node Capital, said in Moments on January 29.
The industry is optimistic about the future prospects of DeFi and actively deploys DeFi as the mainstream voice. Industry analysts also believe that with the gradual improvement of Ethereum 2.0, it is expected to boost the wings of the DeFi ecosystem and reduce high gas costs.
According to Coingecko data, as of 6:00 on January 31, the total market value of the top 100 DeFi tokens by market value was 51.86 billion U.S. dollars, while the market value of Ethereum was 156.3 billion U.S. dollars, and the total market value of DeFi was approximately 33.2% of the market value of Ethereum. Among them, Chainlink has the highest market capitalization among DeFi projects, reaching USD 9.51 billion, accounting for 18.3% of the total market capitalization of the top 100 DeFi tokens.
Top 100 total market capitalization of DeFi tokens
At the same time, after entering 2021, DeFi tokens have shown amazing growth. UNI, AAVE, SUSHI, etc. have repeatedly set new highs, once again igniting the enthusiasm of investors.
For example, after the decentralized exchange Uniswap's governance token, UNI, broke through $15 for a short time on January 27, it has climbed to a new high in the past two days. As of 19:00 on January 31, the high of UNI has reached 20.56. Dollar. Non-small data shows that since 2021, UNI has risen by 386%.
"DeFi is expected to grow to 10 times the current level in 2021." Diginex CEO Richard Byworth previously stated that as Bitcoin enters the "institutional bull market", we will once again witness the growth of DeFi and its assets may increase by 10 Times.
In response to Robinhood's suspension of GME and other stock trading, Compound founder Robert Leshner commented on Twitter that it is time for investors, regulators and lawmakers to understand and embrace DeFi. He believes that this has sounded the alarm for us to create a fair, transparent and autonomous financial market.
Analysts believe that the current fundamentals of DeFi continue to improve. On the one hand, DeFi has stepped out of the barbaric era, and simple and crude cloning projects have been difficult to succeed; on the other hand, established projects such as Uniswap and Sushiswap have been launched. A new proposal and structure.
According to Du Jun, the current DeFi development process has only passed the 1.0 stage, and the rise of subdivisions such as insurance and synthetic assets has just opened the door to DeFi development. With the arrival of the DeFi 2.0 stage, the DeFi protocol still has a long way to go in terms of technological innovation and economic model.