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- Ethereum’s DeFi sector is benefiting from trading interest in decentralized alternatives, while Total Value Locked (TVL) is on the rise again.
- Uniswap, Compound and SushiSwap surged to an all-time high in recent days.
Retail investors scored a victory against the whales of Wall Street and the U.S. investment machine when they drove GameStop’s shares up against all odds. After receiving criticism and threats from regulators and brokers halting trading in certain stocks, Ethereum’s decentralized finance (DeFi) sector appears to have benefited from the news and is picking up steam once again.
As DeFi Pulse data shows, the Total Value Locked (TVL) of the Ethereum DeFi ecosystem has risen to $26.5 billion in recent days, as shown in the chart below. The protocol with the highest TVL continues to be MakerDAO with $4.66 billion, followed by Aave ($3.84 billion), Compound ($3.26) and Uniswap ($3.13 billion).
Bitcoin bull and Galaxy Digital co-founder Mike Novogratz is among the proponents of the theory that DeFi will be one of the beneficiaries of the GameStop scandal. Novogratz believes that retail investors, especially the young “Generation Z,” are eager to see a change in the financial system and stated:
(…) its a large group of people saying they don’t want Citadel preying on their orders from RH, they don’t want IPO’s being allocated to insiders, they don’t like a system geared to the already rich. This is a giant endorsement of DEFI.
Ethereum’s DeFi tokens surge to new ATHs
In addition to the rise in TVL, there has been a rally in the price of the major DeFi tokens in the last week. Data from CoinGecko indicates that tokens from protocols such as Alpha Homora (77.3%), 1linch (81%), Luna (69%), Rune (50%), Compound (41%), Uniswap (47.5%), and SushiSwap (27%) had seen a pretty good performance. Uniswap, Compound and SushiSwap surged to an all-time high in recent days.
Novogratz believes that the DeFi sector will be the epicenter of a “revolution” that will move investors from centralized platforms to DeFi protocols:
Its a revolution that started with people not trusting central authority.Its a call for transparency and fairness. It makes me more bullish crypto but more importantly more focused and committed to systems change.
Uniswap and SushiSwap, two decentralized trading (DEX) protocols, could receive the most attention from investors migrating from centralized exchanges. Their governance model, resistance to censorship, and the incentives they offer to users who provide liquidity have already put these protocols among the most widely used in the DeFi sector with growth that could continue to increase.
Nuggets News founder Alex Saunders called SushiSwap the fastest growing “unicorn” in the entire DeFi sector. Within less than 90 days, the DEX has increased its market cap to $1 billion and the SUSHI governance token has surged by 2,400%.
It's easy to kick a man when he's down. In the wild west, things go wrong regularly. I was threatened, harassed & abused for saying $SUSHI had good fundamentals despite their shaky start.
It's now up 2400% in 90 days & worth $1B.
The fastest unicorn in crypto ever. Tick. 🍣🦄🏆 pic.twitter.com/zdBKuBxiHB
— Alex Saunders 🇦🇺👨🔬 (@AlexSaundersAU) January 31, 2021
Meanwhile, Uniswap has underperformed, but its rally is still significant with a 290.3% rise in one month and 113.6% over the last two weeks. In that period, Uniswap has recorded an all-time high of $30 billion in trading volume.
Whether these protocols will make it into the mainstream remains to be seen. Uniswap founder Hayden Adams seems convinced of the superiority of his protocol over centralized options. Hayden wrote U.S. representative Alexandria Ocasio-Cortez:
Let me know if you ever want to chat about how the @UniswapProtocol is democratizing market making It replaces the professional/insider market makers who pay for order flow with transparent community owned liquidity pools with thousands of participants.
There are over 72,000 community liquidity providers on Uniswap who have come together to create a transparent and decentralized trading platform that is currently outcompeting many centralized trading platforms dominated by professional market makers!
