The decentralized finance (DeFi) market has had a turbulent month and a report in the Financial Times shows that investors from Silicon Valley are betting on the young sectors on a large scale — why are investors so convinced of DeFi?
The month of May was not only a catastrophic month for Bitcoin, it also went steeply downhill for the DeFi sector. As a result, many projects had to go through a stress test due to the crypto crash.
Despite the poor price development in May, the capital managed by DeFi protocols (Total Value Locked) was able to slowly recover compared to the previous week. Total Value Locked (TVL) rose over $ 10 billion to $ 115.59 billion at press time.
Ethereum DeFi projects still dominate the emerging sector, and only the TVL of the Binance smart chain project PancakeSwap (CAKE) currently makes it into the top five.
In particular, the decentralized exchange (DEX) Curve (CRV) was able to increase its TVL this week. This was probably because that curve as well as ave (AAVE) and Sushiswap (SUSHI) to the scaling solution of polygon sets and could attract new users by and capital.
A group of influential people from the Uniswap (UNI) community wants a lobby for cryptocurrencies and especially Decentralized Finance reasons. The group suggests that some of the UNI Community’s assets should be used to fund a lobby group. Among other things, this should serve to promote the interests of Uniswap in politics.
The proposal calls for between one and 1.5 million UNI to be set aside. That currently equates to between $ 27 million and $ 40 million. The funds are to be used to set up and finance an organization monitored by the UNI community. The organization then will be specifically for the crypto community in political use. To be precise, the organization should work to enlighten political decision-makers in order to create greater regulatory clarity for the crypto space.
While the majority approved the proposal in a vote, the proposal was extremely controversial among many community members. Because not everyone wants a single organization to decide how lobbying funds are used. Those who oppose the proposal do not believe that the organization is acting in the interests of all UNI owners and therefore reject it.
DeFi protocols like Uniswap are still extremely young, and the entire sector is barely regulated. Nevertheless, venture capitalists (venture capital) have already millions by investing in Decentralized Finance deserves. The entire sector is becoming increasingly popular with investors, and the graphic from PitchBook is an impressive illustration of this rapid development.
According to PitchBook data, venture capitalists have already financially supported over 72 DeFi projects in 2021. This number already exceeds last year’s figure by more than 25 percent. In addition, according to a report by the Financial Times, a lot of venture capital from Silicon Valley, in particular, is convinced that DeFi has the potential to change the traditional financial system. As soon as there is more regulatory clarity for decentralized finance, it is therefore very possible that institutional investors will also invest in DeFi, according to the Financial Times.
Yieldly is another DeFi project that started on June 5th as Algorand’s first DeFi project. The project was founded by Sebastian Quinn in 2020 and aims to be the first decentralized exchange on Algorand. In addition, Yieldly wants to finally have solved the blockchain trilemma and be both decentralized, secure and scalable.
In addition to multi-asset staking and No-Loss Prize Games will Yieldly also block the chain-wide trading permit.
As the first DeFi project on Algorand, Yieldly wants to fundamentally change the DeFi space. The next few weeks will show whether this mission can succeed.
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