Decentralized Finance (DeFi) is good, but Bitcoin is king: is it true?

Bitcoin is breaking all-time high after all-time high, while Decentralized Finance (DeFi) underperformed this week.

Still, there were two DeFi projects that eclipsed even Bitcoin.

The crypto market is looking back on a historic week, and investors in the DeFi sector also set new records. Bitcoin wasn’t the only one to hit a new all-time high. The Total Value Locked indicator, which tracks the total capital locked up in DeFi protocols, has reached a new record high.
DeFi Pulse DeFi Pulse: Total capital locked in DeFi.

Currently, DeFi protocols manage close to $16 billion which is roughly equivalent to the current market capitalization of companies such as PUMA, LG Electronics or the major Italian bank UniCredit. Even though some Decentralized Finance token prices saw huge price increases this week, the DeFi Pulse Index (DPI) failed to outperform Bitcoin and Ethereum.

Still, as of press time, the „ETF token“ DPI was up 15.13 percent over the past seven days.

While Bitcoin is up more than 20 percent this week, top DeFi names like YFI, UNI and AAVE are up only five to 10 percent. But that may likely be mostly because these tokens already saw huge price increases in late November and early December. Decentralized Finance was one of the first sectors to recover from price lows in the altcoin market in early November.

SushiSwap eclipses bitcoin

Two DeFi tokens actually outperformed Bitcoin. SushiSwap (SUSHI) was among the big winners in December. In the last seven days alone, the price rose by 25.1 percent and on a monthly basis, SUSHI gained 100.2 percent. What was the reason for that?

Yearn.Finance is merging with SushiSwap. The partnership allows the teams behind the two projects to realize synergies. Together, they are working on the major project Deriswap – an all-in-one platform for lending, token exchange and derivatives trading.
In addition, SUSHI announced the release of its „BentoBox.“ This will allow traders to open short and long positions on SushiSwap’s decentralized exchange.
Last but not least, co-founder 0xMaki hinted this week that SushiSwap will soon be available on Polkadot. Polkadot is currently one of the fastest growing smart contract platforms.

All this news seems to have boosted the DeFi token in recent weeks.

An old friend reports back

Another decentralized finance winner in the last week is Bancor Network (BNT). Bancor is a decentralized exchange (DEX) that existed before the term DeFi was established. The project has been around since 2017, so it can be considered an old hand of the DeFi space. BNT rose over 40 percent last week and is trading at $1.41 at press time.

Like UniSwap and SushiSwap, Bancor is a decentralized exchange. But the project takes a different approach and wants to have solved the problem of Impermanent Loss (IL) with a new method.

In doing so, Bancor does not solely rely on the market price but uses price oracles to reduce arbitrage trading that leads to IL. It also uses a new token model to minimize the loss caused by IL. Head of Growth at Bancor Network, Nate Hindman, explains how the system works in more detail in a blog post.

DeFi tokens benefit from Coinbase listing

Just yesterday, Coinbase announced that it plans to go public in the United States. In addition, the crypto company listed several DeFi tokens this week, which included BNT. In addition to BNT, Synthetix (SNX) and Aaave (AAVE) were added to Coinbase Pro and are now tradable. As a result of the listing, all three DeFi tokens saw price increases.

The listing of the tokens can be considered a great success for the DeFi sector. Coinbase is known for its high regulatory standards compared to many other crypto exchanges and provides more legitimacy to the emerging Ethereum sector.

Even though Bitcoin outperformed much of the DeFi sector this week, the DeFi market is one to keep an eye on.

CAUTION: Don’t forget your Bitcoins when filing your taxes!

Tax optimization tips that every Bitcoiner should definitely know about

To avoid the rude awakening when filing taxes in 2021, it is important to realize losses now, secure liquidity, control tax liabilities preemptively and take a scrutinizing look at the portfolio.