The decentralized finance (DeFi) landscape exploded independently from Bitcoin (BTC) last year and the so-called DeFi summer of 2020, which was ignited by emerging staking options, could have a sequel this year.
Despite the recent price correction, judging by the latest jumps yield farming coins are on the rise and the liquidity mining hype could drive this year’s temperatures even higher.
Yield farming coins getting heated
The emergence of a myriad of new DeFi projects and the rise in the sector’s popularity were followed by abundant investment support as the sector’s market cap currently sits at $73.94 billion.
DeFi continues to grow, while prices of DeFi yield farming coins are on the rise across the board, bringing this sector’s market cap that grew 23.65% during the seven-day period to almost $15 billion.
The attraction of providing liquidity via cryptocurrencies to decentralized protocols, which in return reward users willing to bring capital to their platforms, also known as yield farming, is heating up.
Synthetix (SNX), a crypto-backed platform that enables the creation of on-chain synthetic assets (Synths) that track the value of assets in the real world, saw its network token go up 28.75% in the past 24 hours, while its value pumped 62.88% during the past week.
Aave (AAVE) is another DeFi lending protocol that witnessed its token go up 23.82% and 34.17% during the same period, while its competitor, credit lending and borrowing platform Compound (COMP) had its coin price increase 20.5% and 59.59%.
An automated market-making (AMM) decentralized exchange (DEX) SushiSwap (SUSHI) had its native coin’s price grow 24.11% and 13.18%.
Institutional investors
During a Blockworks webinar, Aave recently confirmed plans to launch Aave Pro, set to operate segregated permissioned pools of ‘whitelisted’ users that have passed Know Your Customer (KYC) protocols, eliminating one of the key setbacks for regulated institutions diving into DeFi.
The competitor lending platform Compound has also announced a treasury product for businesses and institutions, which will enable large clients to earn a substantial fixed yield, far more attractive than returns in the traditional financial world.
While yield farming protocols offer an appealing alternative to the low traditional banking interest rates, institutional investors are bound to gravitate to DeFi.
Since financial watchdogs have a particular taste for the high-caliber game, it could be expected that they join with the traditional banks in their hunt for runaway funds.
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