The discussion about Decentralized Finance (DeFi) began in 2019. Since then, many have suspected a groundbreaking revolution in the traditional financial system and rely on the new DeFi protocols. In the following, we will analyze this trend in more detail and examine the largest sectors in detail.
What’s behind the hype and how sustainable is it?
Driven by the tailwind from the second quarter, liquidity mining has seen both the use of the decentralized finance sector and some of the DeFi token courses climb to new all-time highs in the past few months .
Decentralized Exchanges (DEX) recorded trading volumes of just one million US dollars at the beginning of the year. They now consistently exceed the one billion dollar mark. As a result, centralized exchanges are also coming under increasing pressure. Some of the DEXs are developing into serious opponents for the centralized crypto exchanges.
The DeFi sector is gradually trying to revolutionize the central infrastructure of many financial sectors, but some of the DeFi tokens have seen drastic price drops in recent weeks. As a result, many investors became insecure and burned their fingers on DeFi tokens.
Is the DeFi boom over?
For many investors, the last few months in the DeFi-Space were pure chaos. Some made money by joining the liquidity farming trend or speculating on the prices of Ethereum governance tokens.
In the last month, however, the DeFi space went through a painful correction in which most tokens have fallen by more than 50 percent.
While this may seem like the hype is over, the entire DeFi sector is still experiencing tremendous growth. Not only Ethereum can benefit from it. Other networks, such as Tron , are also pushing into the emerging sector. Messari recently announced on Twitter that Polkadot DeFi projects have also raised several million US dollars.