The average DeFi coin is up 50% sice end of October, outperforming Bitcoin’s 38% rally ๐จ This article is 4 years old...
The average DeFi coin is up 50% sice end of October, outperforming Bitcoin’s 38% rally
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Updated: Dec. 8, 2020 at 1:35 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
All eyes have been on Bitcoin over the past few weeks.
Just last week, the coin set a new all-time high on most top exchanges, reaching $19,950 on spot platforms and even surmounting $20,000 in the CME’s Bitcoin futures market.
Further, the coin has seen an influx of institutional support from some of Wall Street’s biggest names. Stanley Druckenmiller, one of the world’s best asset managers, said he supports Bitcoin while a CIO at the world’s largest asset manager Blackrock said he thinks Bitcoin will outlast gold.
But it is decentralized finance (DeFi) coins that have been strongly outperforming Bitcoin.
DeFi outperforming Bitcoin
According to an analysis by “Ceteris Paribus,” the average DeFi token is up by approximately 54 percent since October 31st, which was almost the low of the altcoin market prior to the recent rally.
For context, Bitcoin is up by 39 percent in that same time span while Ethereum is up 52.8 percent. Ethereum has benefited from trends such as ETH2, allowing it to outpace BTC by a large margin.
The best-performers in the DeFi space are SushiSwap (SUSHI), Aave (AAVE), Yearn.finance (YFI), THORChain (RUNE), and Hegic (HEGIC), in that order.
Returns from Nov 1, ~ DeFi bottom. $BTC, $ETH, $DeFi pic.twitter.com/iQCFcyhUcU
— Ceteris Paribus (@ceterispar1bus) December 7, 2020
According to Qiao Wang, a lead at the DeFi Alliance and a former Messari exec, DeFi is strongly outperforming Bitcoin as a result of the lack of liquidity.
He commented last month on why the DeFi space has bounced so strongly from its November lows:
“Recap of what I think happened. The mindshare of every informed alt player was on DeFi. But everyone was too afraid to buy on the way down. A game of chicken. Then everyone piled in on first sign of strength. Today many are still in disbelief. But all mindshare is on DeFi. The liquidity in DeFi is simply not big enough to accommodate all of them. Hence the massive high-volume V-shaped recovery.”
Further, the fundamentals of this space have picked up, with Aave launching its v2 and other teams working and announcing exciting new partnerships and products. For instance, Yearn’s Andre Cronje announced a partnership/merger with the SushiSwap team
Institutions to pick up Ethereum and DeFi
With a growing discrepancy between DeFi and Ethereum and Bitcoin, some think that institutions may soon delve into the DeFi space to find ways to make uncorrelated and higher returns than with Bitcoin.
There is the argument, though, that from a risk management perspective, Bitcoin still has the best risk-reward ratio of any market in crypto.
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Aave
$168.018
Aave is an open source and non-custodial protocol enabling the creation of money markets.
SushiSwap
$0.78902
SushiSwap is an automated market-making (AMM) decentralized exchange (DEX) currently on the Ethereum blockchain.
THORChain
$5.36463
THORChain is built for cross-chain permissionless digital asset liquidity.
zHEGIC
$0.55226
ZLOT Finance looks forward to further democratize the access to the staking lots by pooling $HEGIC tokens within smaller holders in order for everyone to benefit from the settlement fees generated by the Hegicโs protocol.
Andre Cronje is the founder and architect of popular DeFi platform iEarn Finance..