Decentralized finance tokens (DeFi) continue to make dramatic movements in the price charts, compensating for Bitcoin’s low volatility that has recently reached a three-year high. Earlier today, the Aave (LEND) and Synthetix Network (SNX) tokens briefly outperformed the MakerDAO (MKR) tokens as each rebounded to USD 0.375 and USD 4.09, respectively.
The „shift“ was short-lived and MKR has now regained its position above Bitcoin System, SNX and Compound (COMP) and is currently at number 28 in Coinmarketcap with a market capitalization of USD 453 million.
The change probably occurred when the LEND price corrected sharply today, falling 16.5% to USD 0.313.
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LEND has recently surpassed MKR in recording new historical peaks every day. As advertising around the growing DeFi sector continues to grow, governance tokens have been some of the best tokens of 2020.
The tokens do not provide a direct monetary benefit to the holder, apart from speculative gains, but allow them to vote in the protocol decision-making process. For some investors, they see this as an incentive or a long-term gamble for the success of the DeFi industry.
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The concept behind LEND is somewhat similar to MKR, but they differ in the way they generate loan and credit opportunities, as their respective tokens give users a vote on protocol changes. This is especially important in the case of MakerDAO, which requires its community to monitor the price of Ether (ETH) to ensure the linkage of IAD to the US dollar.
SNX is the underlying token for the decentralized Synthetix exchange where users can trade chain assets linked to the value of assets such as gold and shares. Basically, SNX holders have incentives to commit their tokens to create these tradable assets with staking rewards.
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Recently, Synthetix announced a new decentralized asset management platform called dHedge. Aave is also introducing new features to its protocol and in a conversation with Cointelegraph, Aave CEO Stani Kulechov said:
„Aave will also make credit delegation possible, where Part A can delegate its credit line to Part B, which can borrow against it. All this will be possible thanks to a legal agreement through OpenLaw. For example, a loan officer could be a party that wants to accumulate more credit, and a borrower could be a business, an NGO, a government, an institution, etc.“
As the DeFi space continues to boom and produce profits reminiscent of the initial currency offering (ICO) craze in 2017, signs of a similar bubble scenario are beginning to appear as a variety of obscure projects post triple-digit profits each week. Despite these signs, institutional investors seem to be focusing their attention on this new world of finance.