As Bitcoin’s Price Holds Steady, DeFi Coins Thrash About in the Sand

By Decrypt Staff

While Bitcoin’s price today held steady at $11,351, the coins powering leading decentralized finance markets rode the last surf from the crazy, crazy summer of DeFi this weekend; while some are washed-up and gasping for air, others are thriving in this heady, humid market cycle.

Decentralized lending protocols, non-custodial exchanges and synthetic derivatives—almost entirely based on Ethereum—spiked in volume in around August. But what was once an animated party in a cool summer breeze turned into a nightmarish hurricane in September, when several of the top coins collapsed in value. 

This came as no surprise—many thrived on so-called yield farming, which involves protocols issuing additional tokens to people using the platform. Protocols had to mint more and more to keep people using their platforms; in September, the market finally buckled under the weight, causing the ruin of many top DeFi coins. 

Up and down they go, causing nausea to all who trade them as the market settles on a few key players.

Some profited this weekend amid the ruckus: Ren, the coin that powers its blockchain interoperability protocol, one function of which ports Bitcoin to Ethereum’s decentralized finance protocols, rose by 29% in the past 24 hours, and 33% in the past week, according to metrics site CoinMarketCap.

But others dug deeper into the sand, by now littered by cigarette butts and broken bottles, the whiff of cheap cologne still in the air. The token powering DeFi protocol Yearn.finance, YFI, fell by 5% in the past 24 hours and about 10% in the past week. This, despite a huge spike in the middle of the week, from about $14,700 on Thursday to about $18,362. (Its current price is about $16,400). And the token powering SushiSwap, which just a few months ago was considered a worthy opponent to decentralized exchange Uniswap, fell by about 4% in the past day and 22% in the past week. 

Still, while some of the coins that brought value to decentralized finance this summer crashed this weekend, the entire decentralized finance market is alive and well. According to metrics site DeFi Pulse, investors have locked in $10.8 billion worth of cryptocurrency in DeFi protocols, slightly down from the market's peak of $11.2 billion on September 30. Back in June, the DeFi market only had about $1 billion in it. The most popular protocol is Uniswap, into which investors have poured in $2.62 billion. 

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