The DeFi revolution during the global crisis

In early 2020, the COVID-19 pandemic wreaked havoc on human lives and the global economy. The crypto world was also hit, with the cryptocurrency market plummeting in March of that year. Bitcoin (BTC) lost 52% of its dollar value in one day, and Ether (ETH) lost 43%, rocking decentralized finance (DeFi) as it tumbled.

The resulting locks have had a slower but more profound impact on crypto. As the world is outdoors, screen time has steadily increased, and interest in cryptocurrency has increased along with market capitalization. Soon, new technologies were being developed and implemented at an unprecedented speed.

DeFi goes to the moon

The first steps in Defy were taken in 2011. By developing smart contracts on the Ethereum blockchain in 2017. MakerDAO and Compound were early market leaders. In June 2020, Compound introduced yield farming, also known as liquid mining, an arbitrage method that converted crypto assets to earn high interest, fees and rewards. It is now common practice.

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Compound was a pioneer in decentralization. COMP (COMP) was the first governance token that allowed users to directly participate in the governance of a decentralized autonomous organization (DAO). By the end of the year, decentralization was well under way in many DAOs.

Explore the history of CRYPTO

A DAO is an organization governed by digital rules without hierarchical governance. It is similar to Bitcoin in its attempt to eliminate all middlemen in transactions.

In September 2020, DeFi collateral levels jumped to $9 billion from $700 million at the beginning of the year. At the time, Bloomberg wrote:

“The cryptocurrency mania known as decentralized finance has helped make digital currencies the best-performing asset this year.”

Decentralized exchanges (DEXs) have also played an important role. These were already in 2020, when OasisDEX was launched in 2016 and Uniswap appeared in 2018. DEX allows users to trade crypto assets peer-to-peer – that is, without an intermediary. DEXs, in turn, have led to the creation of automated market makers, which have benefited from product breeding.

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The result of all this activity was the bubble or “price explosion period” that the crypto world knows as the 2020 DeFi Summer.

The third Bitcoin halving

The third Bitcoin halving is on May 11, 2020, just before the start of DeFi Summer. The halving is an event where mining rewards are reduced by 50% after every 210,000 BTC mined. In the year In 2020, the mining reward was reduced to 6.25 BTC.

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The halving is intended to prevent inflation by slowing the rate of mining, while reducing production and increasing demand. BTC was trading around $8,800 during the third quarter. It saw small gains in July and August 2020 and began to see significant price movement in October, peaking at $63,000 in April 2021.

2021: The Year of the NFT

Non-fungible tokens (NFTs) are unique digital objects on the blockchain. They were launched several years ago, but the market didn't really take off until 2021. They are at the heart of today's real-world asset token development and are used to host ticketing, licensing, gaming, identity verification, music and other purposes. Their earliest use was for gaming, collectibles, and painting.

Cryptokitties was an early glimpse of things to come. Developed by Dapper Labs and launched in 2017, the game used NFTs to collect, trade and breed digital virtual cats. Cointelegraph later said: “This digital cat-breeding blockchain game created a bit of a buzz on the Ethereum blockchain at the peak of 2020. The CryptoPunks series also came out in 2017.

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The Bored Up Yacht Club line launches in April 2021. Inventor Yuga Labs sold all 10,000 by the end of the month, raising $3 billion. He then launched the low-cost Mutant Ape Yacht Club in August 2021, which is still active today.

Explore the history of CRYPTO

In 2017, there were about 120,000 NFT users. Their numbers grow to 1 million in 2020, 3.5 million in 2021, and then 9.9 million the following year. Revenue from NFTs jumped nearly 40,000% from 2019 to 2021, but slowed sharply in 2022. OpenSea, a marketplace founded in 2017, held 87 percent of the NFT market by early 2022, but its trading volume has declined by 99 percent. year. Regardless, revenue from NFTs will continue to grow and is expected to reach $2.4 billion by 2024.

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