How Long Will DeFi Boom Leave Former Altcoin Darlings In The Dust?
Bitcoin faces tough competition in this DeFi boom. It affects other altcoins too. Why is the situation bleak in the cryptosphere?
The Bitcoin And Altcoins
Coming as far as eclipsing that of many top-10 altcoins along with Bitcoin, is the strong performance from DeFi tokens whereas how long is the trend lasting?
Having reflected heavily on the price charts with DeFi as well as yield-related tokens like Yearn.finance (YFI), Aave (LEND), as well as others rallying to their all-time highs in 2020, the rapid popularity and investment growth is observed in the decentralised Finance sector.
Surging 10x since the listing is YFI alone.
Outperforming Bitcoin and other altcoins by a long stretch is in fact most high profile DeFi related tokens. Being eclipsed by DeFi tokens was the governance and infrastructure projects like Chainlink and UMA where the latter of which became one of the largest DeFi protocols in September.
A few sectors in the cryptocurrency world appears to have been left behind, as so with all eyes set on DeFi projects and smart contract platforms like Ethereum, and Cardano. Cross payment platforms like XRP and Stellar are the most noticeable ones.
It has failed to keep up with competitors like Ether which has been the epicentre of the 2020 DeFi craze although smart contracts platforms like EOS have made modest gains with most DeFi related tokens coming as Ethereum ERC20 tokens.
Here Ripple Loses Its Allure
Having recently lost its position as the third-largest altcoin to Tether, among the top 10 coins by market cap was XRP one of the worst performers in 2020. With a market capitalisation of roughly $10.6 billion, Ripple is currently the fourth biggest cryptocurrency.
It lags far behind Bitcoin and many other altcoins, while XRP has risen 20% since the start of 2020. The exchange revealed that XRP is the fifth-worst performing crypto on the platform in the Binance’s Q2 report.
Regarding the marketing and sale of the XRP token, there have also been multiple public issues with the project such as the long-lasting class-action lawsuit. Over the use of the “PayID” brand, ripple is also facing a copyright-related lawsuit. Expressing concerns when it comes to adopting One Pay FX, Ripple’s international payment network, most recently Santander is one of Ripple’s key bank partners.
There are a few positive signs for the project such as the growth of On-Demand Liquidity that has processed over $2 billion in transactions since the launch where it saw an 11x growth in the first half of 2020 compared to the first half of 2019 as things look grim for XRP.
With XRP partner Flare Networks announcing a project that aims to bridge the Ripple and Ethereum blockchains, there are also plans to move closer to the DeFi space.
Why Privacy Coins Were Also Left Behind
Given the speculation around DeFi as well as the growth in stablecoin use, cross-border payments do not seem to be a hot topic in crypto at the moment. Including privacy coins, there are however other pockets that have also failed to perform as well as DeFi or even as well as Bitcoin.
Bitcoin has outperformed many of the privacy coins in the market although popular coins like Monero, Zcash, have seen modest gains in comparison to Bitcoin in the last 12 months roughly 5% and 20% respectively according to the data from Messari a digital asset data company.
When TheDefi Bubble Pops, The Tables Will Turn
The craze has also generated a host of clone and meme projects that are capitalising on the hype while DeFi related tokens have generated accentuated gains for holders in 2020.
In what some people believe was an exit scam, some tokens in the DeFi sector came to be taken massive hits to the value including the SUSHI token with the main developer market selling a significant number of tokens. The next development observed was Hotdog another DeFi meme-token that had made media waves recently. Leaving many investors holding worthless bags of hotdogs, the food-themed token lost 9% of its value in the span of 5 minutes.
Users should be aware that many of these new projects have very little to offer to be reminiscent of the ICO space in 2017 while DeFi has been leaving other sectors in the cryptosphere behind.
Especially as the Ethereum blockchain continues to be overwhelmed, the DeFi sector may soon follow the same footsteps. Being left out of the current hype, in case this happens, it is likely that profits will go back to bitcoin to fiat/stablecoins or to other sectors of crypto
Especially as high yield automated strategies continue to be developed, on the other hand, DeFi has shown few signs of slowing down anytime soon.
Concluding The Note
As investors look for safer assets to earn interest in, it is possible in the future that a portion of these profits will surely trickle back into Bitcoin and altcoins. To develop new use cases to entice investors, it might not be necessary for non-DeFi coins and networks.