Ex-JP Morgan investment banker gives 5 reasons why DeFi is reaching “escape velocity” 🚨 This article is 4 years old...
Ex-JP Morgan investment banker gives 5 reasons why DeFi is reaching “escape velocity”
2 min read
Updated: Apr. 22, 2021 at 12:04 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
It goes without saying that the past few weeks haven’t been too hot for Ethereum and the decentralized finance (DeFi) space.
One crypto analyst shared the table below earlier this month, showing that the average DeFi coin has dropped 61.8 percent since their local highs, set some time over the past 45 days. Coins like Curve DAO Token, SushiSwap’s SUSHI, and bZx have dropped in excess of 90 percent from their highs.
It’s worth noting that since he shared this table, DeFi coins have continued lower, posting additional losses of 5-20 percent across the board.
Despite this, the fundamentals of the DeFi space have continued to gain strength.
So much so that a former JPMorgan investment banker laid out five key reasons why this segment of the Ethereum market is reaching “escape velocity.” How token prices will react to these fundamentals in the near term, though, remain to be seen.
DeFi fundamentals stronger than ever before: fund managers
What comes up must come down, right? If you’ve been invested in DeFi coins over recent weeks, you likely think this to be true.
Despite the clear correction in leading Ethereum-based tokens, fund managers in the space are certain that the macro trend for the DeFi space is still one of growth.
Santiago R Santos, a partner at DeFi-centric crypto fund Parafi Capital, recently made this much clear when he shared five core reasons why this space is reaching “escape velocity.”
As a relevant aside, Parafi Capital was recently invested in by Galaxy Digital, Mike Novogratz’s crypto investment bank. Galaxy Digital has said that they were hesitant to invest in yield farming due to some regulatory and sustainability concerns.
The five reasons mentioned by Santos are as follows:
- MetaMask, a leading Ethereum-focused smart wallet used by most DeFi users, has reached one million monthly active users. One year ago, this metric was closer to one-quarter of a million.
- The amount of circulating stablecoins has reached $20 billion, a metric up 400-500 percent in 2020 alone. Stablecoins are used for trading but they are seeing massive usage within DeFi protocols like MakerDAO, Compound, and Aave.
- Ethereum is being scaled through a variety of solutions like the upcoming ETH2 upgrade and through layer-two technologies, such as the one being tested by Synthetix at the moment.
- Companies like Rainbow and Argent are rolling out user-friendly wallets that should allow less technically-inclined and less crypto-savvy users to interact with Ethereum and DeFi.
- Similarly to the last point, on-ramps and traditional finance bridges have become more accessible due to the support of crypto by firms like Square, Robinhood, Visa, etc.
1/ DeFi reaching escape velocity:
– MetaMask reaches 1M MAUs
– $20B in circulating stablecoins (+17B YTD)
– Scalability improvements (L2s launched)
– User-friendly wallets
– Easier on-ramps and tradFi bridges being built (Cash App, Robinhood supporting crypto) https://t.co/WWkk8x6ap2— Santiago R Santos (@santiagoroel) October 5, 2020
Other fund manager bulls include Jeff Dorman, a Wall Street investor turned CIO of Arca. He noted that while DeFi coins have undergone strong corrections over the past month, the underlying revenue generated by leading protocols has risen by dozens, even hundreds of percent.
Mentioned in this article
Curve DAO Token 
SushiSwap 
bZx Protocol 
Synthetix 
JPMorgan 
Galaxy Digital 
Compound 
MakerDAO 
Robinhood 
Mike Novogratz 
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In this article
Curve DAO Token
$0.40881
Curve DAO (Decentralized Autonomous Organization) is a decentralized platform built on the Ethereum blockchain that aims to provide a stable and efficient market for trading stablecoins.
SushiSwap
$0.78941
SushiSwap is an automated market-making (AMM) decentralized exchange (DEX) currently on the Ethereum blockchain.
bZx Protocol
$0.04987
The Utility of BZRX The BZRX token is a governance token, first and foremost.
Synthetix
$1.83185
Synthetix, formerly Havven, is a cryptoasset-backed network that enables the creation of on-chain synthetic assets.
JPMorgan
JPMorgan Chase & Co is a global leader in financial services, offering solutions to the world’s most important corporations, governments, and institutions in more than 100 countries.
Galaxy Digital
Galaxy (TSX: GLXY) is a digital asset and blockchain leader providing access to the growing digital economy.
Compound
Compound is an open-source, autonomous protocol built for developers, to unlock a universe of new financial applications.
Maker is a Decentralized Autonomous Organization that creates and insures the dai stablecoin on the Ethereum blockchain.
Robinhood is an investing platform where you can invest in stocks, ETFs, options, and cryptocurrencies side by side, all commission-free and easily accessible in one app..
Michael Edward Novogratz, born on November 26, 1964, stands out as an iconic figure in the financial realm.