#DEFİ #DefiMonеy #stableBTC #stabilcoin #BinanceHerYerde
Another “DeFi Summer” is unfolding in what has traditionally been the most-speculative corner of crypto, with activity surpassing levels seen before the collapse of the TerraUSD stablecoin that sent the sector reeling almost two years ago.
Once again, stablecoins are at the center of activity in decentralized finance, where proponents claim the elimination of intermediaries such as banks and brokers through the use of software-driven applications will democratize finance. Stablecoins, which track a real-world asset like the dollar, allow participants to avoid converting to and from fiat money at every turn in the often volatile sector.
The name DeFi Summer was coined in 2020 when activity surged after the emergence of so-called liquidity mining and yield farming programs that offered participants double-digit-percentage returns for lending their crypto. DeFi is now logging some of its strongest metrics yet. There are more users transacting on DeFi, borrowing stablecoins on peer-to-peer lenders and providing liquidity in exchange for token rewards, according to data compiled by Zack Pokorny, analyst at digital-asset firm Galaxy. But the speculation-fueled growth has also revived questions about the sustainability of the sector.
“It reminds me of the DeFi summer,” said Rachel Lin, co-founder and chief executive officer of the DeFi derivatives exchange SynFutures. “The difference being the overall yields are much higher.”
Indeed, the weighted interest rates for borrowing stablecoins on longtime DeFi lending platforms such as Aave and Compound have spiked to nearly 18%, highlighting the market’s insatiable demand for stablecoins to use for transactions.
DeFi Demand Reaches New Highs
Interest rates for stablecoins go up on Aave, Compound
Much of the growth is being driven by pure speculation, as the digital-asset market has seen dramatic price appreciation this year amid the successful launch of several spot Bitcoin exchange-traded funds in the US.
“I think of DeFi as a reflexive loop,” said Michael Rinko, research analyst at digital-asset firm Delphi Digital. “Prices go up, demand for leverage goes up, on-chain borrowing goes up, rates up go, stablecoin flows go up chasing yield, prices go up.”
Meanwhile, a software upgrade on the Ethereum blockchain in March has also helped fuel the growth. One result of the upgrade, known as Dencun, is significantly lower costs for trading on so-called Layer 2 blockchains that overlay Ethereum. Dencun made blockchains like Blast, Coinbase-launched Base and others more competitive against blockchains like Solana, which also has seen a major recovery and comeback since the collapse of Sam Bankman-Fried’s FTX exchange.
Ethereum's Dencun Upgrade Drives Record High Activities
Transaction counts reach historical highs on layer 2 blockchains
“Declining fees has kind of given people some perspective of like ‘oh wow I could just go try this,’” said Galaxy’s Pokorny.
‘Degens’ Are Back
With low transaction fees, activity has surged in some of the most speculative parts of DeFi such as memecoins and points — which are airline-like loyalty programs by projects and are meant to attract more devoted users. Memecoins, which are tokens with very little utility, are thriving even more on decentralized exchanges, or DEXs, than their centralized counterparts, since memecoins can get listed almost instantly on the peer-to-peer platforms. While the loyalty points pushed out by many new crypto startups have come with few guarantees, enthusiastic fans also are aggressively collecting them, anticipating future rewards of tokens, often referred to as airdrops.
“DeFi is pretty speculative and these point systems and airdrops and all this stuff are really driving a big amount of the activity,” said Pokorny.
SynFutures’ Lin said that the rising appetite for riskier assets in DeFi is driven by the “you only live once” or YOLO sentiment among investors.
“So far, from what I’ve seen, it’s still mostly degens, meaning most of those entering the space are not new,” she said, referring to the crypto slang for “degenerate” traders who have higher risk appetites.
DeFi advocates have cited newcomers such as EigenLayer, which is now the second-biggest project by the total value of cryptocurrencies sent to the platform, for helping fuel the resurgence. EigenLayer received $100 million in capital from Andreessen Horowitz in February, as venture investments in crypto recovered from the lows last year.
Eigen Layer facilitates a process called “restaking,” which is a takeoff on the method that runs Ethereum, where tokens are deposited or “staked” to the network to help validate transactions on the blockchain. Restaking allows new projects building on top of Ethereum to lever the blockchain’s security for their own network. So far, more than $15 billion of deposits are on Eigen Layer, according to data tracker DeFi Llama.
As newer projects such as EigenLayer take off, supporters remain optimistic about DeFi’s future.
“Decentralized systems and finance, smart contracts and all this stuff like speculation is our way of proving that it works,” said Pokorny. It’s “just our way of showing this is a viable infrastructure that we can then sub in real assets for.”
Or until the latest DeFi summer fades.
