Defi Space Worth Over $11 Billion Market Capitalization
Defi’s booming concept broke its record in terms of market capitalization. As per the latest data, Defi Market is worth over $11 billion Market Cap and the amount of cash locked into Defi contracts also have crossed $4 billion. The Defi protocols have shot up from $1 billion to $4 billion in just a couple of months due to the immense craze of the investors in a new concept called ‘yield farming’.
One of the most eye-catching Defi projects on top position is Chainlink (LINK) which has rallied over 167 percent in 2020. Early investors whopped around 64 percent profit according to data released by Santiment. That said, several analysts believe the surge in Chainlink is due to an increase in demand for Defi which resembles the 2017 ICO bubble.
Out of $11billion Defi market capitalization, $LINK token currently owning more than $5 billion market capitalization. At the time of reporting this, $LINK token is trading at $13.62 against USD, shining with over 2.9 percent within an hour and 66.3 percent within the past seven days.
Also – Do you know this Defi Token now worth over $6K, surges over 50 percent within a week?
Defi bubble similar to 2017 ICO bubble
Besides Bitcoin and Ethereum which are proven use cases, the new Defi projects are also mounting. However, it’s more important to analyze, which projects would survive and which ones would mirror the 2017 bubble.
As always the case, this year Defi is the new term, appearing on top of the headlines. In fact, the community on Twitter is widely discussing these two topics – Will the Defi bubble burst as the 2017 ICO bubble? And if the bubble burst will chainlink face a breakdown?
Well, the nib of the matter is that the rising demand in the Defi protocols which led to a surge in the price of the Defi-led tokens like LINK has recalled the ICO boom 2017. However, many analysts have cautioned the investors that the bubble may pop up at any moment.
The fact that no one can forget, thousands of companies raised billions of funds from investors through ICO’s in 2017. Unfortunately, a year after when the bubble burst. It then appears that 95 percent of the ICO lost almost all their value and regulators stepped in.
Hence a similar scenario is looked upon the Defi protocols as more than $4 billion is locked up with the Defi protocols. The majority of value in Defi is locked on lending and stablecoin projects which are proven use cases.
Difference between the 2017 bubble and the current Defi phase
Zachary Dash, an enthusiast building protocol, XIO highlighted One major difference between the 2017 bubble and the current Defi phase. He says in 2017, $100 million market cap projects were considered as extremely low market cap. According to him, only $10 million market cap is considered as low in 2020.
You may find this interesting – 5 Stunning Reasons Why Bitcoin Becomes a Better Investment During COVID-19
Summarizing the long story short, the 2020 Defi bubble is seen as the 2017 ICO bubble. The investors heavily poured in their funds in billions on ICO’s and now of Defi’s. But the Defi represents only a small part in the crypto industry. Out of nearly $340 billion global crypto market cap, Defi accounts for only 1.2 percent of the entire market. Therefore, investors advised having due diligence about the market before backing any project.