Balancer and Compound, among other projects, announced native currencies that use the SAFG protocol. More than 50% of the DeFi market belongs to MakerDAO.
Until now, this year, the value of the tokens locked on Ethereum’s DeFi platforms has reached twice the USD 1 billion figure. However, some factors could indicate that the capital ventured on the different smart contracts corresponds to a competition to lead the market among different projects.
According to DeFi Pulse, the Total Value Locked (TVL) has progressively increased, following the general crash on March 12th. At that time, cryptocurrency markets fell sharply. Different analysts have criticized this index because it does not seem to distinguish the veracity of the sources. Total Value Locked measures how much capital has been bet on the different markets and platforms of the DeFi ecosystem.
Tokens for Governance
The bullish trend in DeFi governance tokens is one of the main explanations for the total value of DeFi to have returned to USD 1 billion. Compound, Balancer, UMA, Curve, and pTokens announced native currencies that use the SAFG protocol, which allows setting parameters for the distribution of tokens on a stake-based platform.
On June 1st, Balancer began distributing BAL with the Liquidity Mining program, which allows tokens proportional to the invested capital. Compound announced that it will have its COMP distribution model ready in July, which seems to be influencing the TVL of the lending platform.
With USD 536 million in locked capital, Maker remains at the top of the list. This would explain the state of the metric, given that the commission on the stability of the network requires payments of 7.5% of the value and is calculated according to the capital invested in smart contracts designed for this purpose.
Concerning governance tokens, there have been controversies on other networks like Ripple, EOS, and Tezos. In the case of these three networks, a transaction volume metric may be based on sources that do not express the truth of what they indicate. For instance, 98% of XRP transactions do not exchange value, but serve for network governance or consensus, transactions between the same person, and other non-market cases.
Bitcoin in DeFi
Bitcoin as collateral for networks like MakerDAO also seems to have driven the Total Value Locked of DeFi platforms. This allows Bitcoin users to convert funds into WBTC, which they can use as a backup to generate DAI. Bitcoin is the second asset, after Ether, used for this purpose.
Other ERC-20 tokens like BTCSHORT offer an asset that allows investors to obtain Bitcoin returns in periods of less than a day. Likewise, tokens that serve as a gateway between Bitcoin and Ethereum have gained prominence.
For example, recently launched RenVM adds RenBTC and has until now received around 50 BTC of capital, equivalent to USD 500 thousand. Ethereum’s pBTC already mobilizes USD 200,000 worth of its tokens. Lastly, dXdY recently launched perpetual Bitcoin futures, which could gain ground in a possible bullish market.
According to data from DeFi Pulse, these leverage, short-term investment, or loan projects have up to 70% more Bitcoin units than Lightning Network and Liquid Network. However, the objectives of these projects do not point in the same direction.
By Willmen Blanco
