Summary: DeFi tokens that have dominated the crypto market over recent weeks took a hit in recent days with yield farming project Yearn Finance leading the decline by dropping 10% over the past 24 hours. Yearn Finance was one of the earliest DeFi success stories with its price starting below $5,000 in July and since rallying ...
Yearn Finance was one of the earliest DeFi success stories with its price starting below $5,000 in July and since rallying to exceed $30,000. As DeFi picked up steam, other tokens including Chainlink and Compound surged. However, over the past days altcoins and popular DeFi tokens have faced a correction even as Bitcoin and Ethereum have seen positive price movements.
Bitcoin and Ethereum both experienced a brief pump yesterday following The Federal Reserve's announcement that inflation would be allowed to rise above 2% for the foreseeable future. Despite Bitcoin and Ethereum's recent strength, altcoin prices have fallen.
The price drops come as sentiment surrounding DeFi seems to be slowing. On Friday, September 11 Bloomberg published an article calling out the copy-and-paste nature of the decentralized space citing recent SushiSwap drama. Co-founder of research firm Coin Metrics, Nic Carter, told Bloomberg that the SushiSwap saga revealed to many in the crypto communtiy that a large number of DeFi products are overvalued.
The DeFi boom is reminiscint of the 2017 ICO craze which saw the launch of tons of tokens, many of which folded, taking investor money with them. It's likely many DeFi projects will similarly die out, leaving behind only the strongest projects. Following the price drop this week, influencers in the crypto space quickly took to Twitter to defend DeFi.
Several argued that as the Ethereum ecosystem grows more capital and higher yields will be accessible. Many chose specific projects to advocate for, mostly Yearn Finance.
Regardless of short-term price movements, DeFi projects will continue expansion efforts. A recent tweet from Messari researcher Ryan Watkins outlined some recently rolled out Yearn features including entering automated market maker, lending and stablecoin markets.
By Emily Mason