No, DeFi is Not Dead

DeFi Token Price Doesn’t Show the Full Picture

The DeFi bubble might have popped but DeFi itself is stronger than ever.

After an absolute DeFi explosion this (northern hemisphere) summer, with food-themed coins popping up everywhere, hundreds of millions in digital assets flowing into untested and unaudited protocols, anonymous founders based off cartoon characters hailed as heroes, and “million-percent yields” flashed across colorful UIs, it was inevitable that the froth would start to subside.

Hottest tokens crash

And sure enough, then came the code bugs, hacker attacks, scams and rug pulls. Outside of crypto Donald Trump got Coronavirus and approval of a US stimulus package was questioned. Soon those impossible yields were nowhere to be found, and tokens which only seemed capable of going up started crashing.

The DeFi hype is subsiding. In this past week alone, the hottest tokens of the summer, SUSHI, SWRV, CRV, YFI and UNI are down by more than 20%. In the past month, the DeFi market lost 15% in total market cap, according to Santiment.

Hindsight is 2020

As builders and investors pick up the pieces, it’s a good time to reflect on the major developments so far this year and on the lessons we can learn from them. For that, take a look at the video produced by Robin Schmidt and Alp Gasimov of Harmony Protocol, and relive the greatest hits showcased on The Defiant channel.

Bullish Metrics

Still, while the DeFi hype is deflating, decentralized finance is stronger than ever. It’s through these boom and bust cycles that protocols can learn to build better and safer products. As token prices slump, DeFi keeps rising by other metrics:

Total value locked in DeFi is up 15% in the past 30 days to $10.5B, according to DeFi Pulse.

Daily new DeFi addresses continue to spike past 6k for the first time ever, according to data by Richard Chen of 1confirmation, and Mika Honkasalo of The Block.

Outstanding loans issued by DeFi protocols soared by over 40% to $2.3B over the past 30 days, according to DeFi Pulse.

While many only heard of DeFi amid the yield farming craze, this cypherpunk financial system has been around since at least 2017 with MakerDAO. The ecosystem we see today was built in a bear market. The recent slump isn’t a sign of the death of DeFi. If anything, it will prompt developers and teams to put their focus back into building a more open, accessible transparent, and fun financial system.