Yields are better than spot trading, and I dare you to challenge me on that one! If you’ve seen the market lately, you’ll be surprised that Layer-1 DeFi maximalists have been memed out. Although Bitcoin and Ethereum are blatantly lazy, DeFi’s not taking a beating despite tokens being dragged under by Bitcoin!
What other signs do you want, anon??
- Ethereum is losing DeFi market share to Layer-1 protocols
- Attractive yields are outperforming the market by a mile!
- A new DeFi Summer is initiated by capital rotation
First, let’s get technical, using Sheldino’s DeFi Index chart, and then we can get into the nitty-gritty of DeFi’s new season.
As it stands, the daily DeFi Index chart shows DeFi is at key support levels, creating a double bottom. We’ve been testing support repeatedly, and with DeFi Season 2.0 gathering momentum, we could be in for one HELL of a ride! We’re not saying it’s up or down, but just pay attention to it.
Beyond the technicalities, DeFi’s game for 2022 is amping up. It’s like DeFi went MIA for a year, buffed itself up, and now it’s chipping away at Ethereum’s market share.
During the 2020 DeFi summer, Ethereum Total Value Locked (TVL) dominance was more than enough at about 95%. As such, Ethereum was the Chosen DeFi One. However, crypto tides are always changing, and that shouldn’t surprise anyone!
DeFi moving from Ethereum
Research has been done, opinions have been formed, and finally, the data doesn’t lie, right? Not so fast, though, because there are two ways of seeing Ethereum’s dominance in the greater DeFi context. A graph posted by the Economist shows what Layer-1 maximalists are rooting for – Layer-1s are taking over DeFi.
But the other side of the coin (haha!) is The Block’s DeFi representation, which considers every Layer-1 protocol on its data, painting a more complete picture. Ethereum’s market is taken for granted, but capital is distributed among more than one blockchain.
Thus, if we take Ethereum and Layer-1s as single anchors, Ethereum’s market share is definitely thinning out. And with good reason. Users want to degen, and high fees and a slow network make the experience much less than appealing.
The verdict is in! The TVL pouring out of Ethereum is less likely to even consider going back. Why even hassle when there are better alternatives?
Ethereum’s losing it!
Layer-1s are outplaying Ethereum at its own game – we’ve covered that this month already so you should be up to speed. Fantom January what?
To lay it out, FTM is 100,000 transactions away from outperforming Ethereum. And even if FTM is 51x off Ethereum’s market share, on-chain activity doesn’t lie! EVER!
There’s a rotation happening onto Layer-1, and Crypto Banter’s thesis of on-chain activity dictating momentum and narrative has never been wrong! To add more sauce to the story, AVAX has awakened, and it’s putting Ethereum to sleep.
In the past three days alone, US$365.7 million has been bridged out of Ethereum onto AVAX, and the trend keeps on keeping on. So maybe Bitcoin could stop being so down, and we can see a FULL off-Ethereum rotation in full swing?
And if one piece of data summarizes everything here, it is this: When users trade, wallet usage goes up. AVAX wallet activity is spiking along with TERRA and LUNA, a telling sign.
The yields, anon, those yields!
Layer-1s like FTM or Terra have developed catchy ways of generating better returns from us degens. It’s on a different level to what the market currently offers. But, seriously, have you seen those TSHARES and TOMB annual percentage yields (APYs)? They’re out of this world, and we covered good strategies right on this channel!
LUNA doesn’t have massive yields, but they’re safe because they use algorithmic stablecoins which puts money to good use with minimum risk. 19.5% APY is a good bet when risk is near zero. AVAX is on the same safe side, with low impermanent loss risk and APYs in the 20% or risker ones that can bank a 40% APY.
However, FTM is one of the main contributors to the DeFi rotation. The TVL on the chain has increased by 28.21% in a little over a week. And that’s due to the campaigns created to incentivize the rotation. With FTM drawing so much liquidity, could this be the first sign of a new DeFi Summer 2.0? It sure as hell isn’t Olympus DAO. Psych!
Crypto history seems to be repeating itself. DEX volume compared to CEXs has broken the 10% mark since the first DeFi summer of 2020.
So we’re having 2020 flashbacks as “safe” DeFi strategies and yields help us outperform the market, especially when Bitcoin is acting up.
DeFi Summer 2.0 is here. You might be right if you think it’s risky, but we could say the same for CEXs in the crypto space. With high yields, strong growth, and the fact that they’re hot like HOT tamales, the advantages might just outweigh the drawbacks. On that note, scared money doesn’t make honey, right?
Ran mentioned before on the Crypto Banter show about committing to Layer-1s and earning interest on both your stables and assets. We hate to say it, but he was right again! Because the market is choppy and indecisive, DeFi lets you sleep at night without worrying you’re overexposed to volatility. Ain’t nobody got time for that!
Layer-1 DeFi Summer 2.0 is coming and the data has our back on this one!
Wise degens will consider looking into safe strategies for stablecoins and assets and open a position on protocols to expand their yield-bearing opportunities. The best way to outperform the market now is to prevent being chopped up by sideways market movements, and accumulate more assets – and stable coins – on high-performing protocols.