ZB Academy: Although the number of DeFi projects has declined, the total value is still rising
Since the peak of the DeFi explosion in the summer, due to the overestimation of the value of Bitcoin, a large number of Ethereum floating in the high space have been sold, and the soaring Bitcoin has suddenly stolen a lot of liquid capital shares.
However, despite this happening, the total dollar value locked in the DeFi application continues to climb, as if nothing happened. Does this indicate that distributed finance is fundamentally reasonable, or is this just a precursor to disaster waiting to happen?
Just like Bitcoin’s performance, gaining a foothold and the possibility of preparing for a large-scale bullish breakthrough, 2020 is already an important year for the development of Ethereum and DeFi.
These Ethereum-based ERC20 cryptocurrencies have recently suffered a huge impact in the industry. As the prices of some cryptocurrencies have skyrocketed, the total value locked in DeFi apps has also soared, but in the summer, this hustle and bustle started to slow down and valuations fell.
Yearn.Finance, Aave, Uniswap and some other projects have plunged 60% or more from their summer highs, but something interesting happened in the process.
However, according to data from ZB.com, the “lock-in total value” in DeFi continues to grow. While asset valuations have fallen, more funds have been invested in DeFi applications.
Even if the valuation returns to a normal level, TVL can maintain synchronous growth, which shows that DeFi’s fundamentals are strong, which may indicate that this correction is healthy and may lead to substantial price increases in the future. Or, this may also imply that the DeFi trend itself has not reversed, even if the asset upward trend has reversed.
ZB.com’s market researcher believes that although the number of cryptocurrencies in DeFi has been greatly reduced, the selling related to DeFi projects such as Yearn.Finance and Uniswap has not stopped. Either the price will rise immediately and continue to soar and there will never be a major correction, or the growth of TVL may also bring disaster.
If the total lock-in amount of DeFi starts to decline and the parabola of the data has an inflection point, it may be possible to predict a major correction like other data. When the DeFi fever is finally broken, the parabolic assets will drop by as much as 80%, and the same statistics will happen to TVL again.
About ZB Group
ZB Group was founded in 2012 with the goal of providing leadership to the blockchain development space and today manages a network that includes digital assets exchanges, wallets, capital ventures, research institutes, and media. The Group’s flagship platform is ZB.com, the industry leading digital asset exchange. The platform launched in early 2013 and boasts one of the world’s largest trading communities.
ZB Group also includes ZBG the innovative crypto trading platform, and BW.com, the world’s first mining-pool based exchange. Other holdings include wallet leader BitBank, as well as exchange brands ZBM, ZBX and Korea’s Bithi.
Industry intelligence and standards are headed by the recently launched ZB Nexus who embody the core values of ZB Group and open-source their reports and analysis for the public.
Learn more about ZB Group by visiting www.zb.com.
