DeFi has been big news in 2020, for better or for worse. Several high-profile hacks and attacks early in the year cast a cloud over the industry, but that didn’t stop DeFi from growing bigger and better as the months went by. So what is DeFi up to right now, and how do things look for the tail end of 2020?
Billions locked in DeFi
DeFi passed the $1 billion mark back in February, and it’s just kept growing since then. According to DeFi Pulse, as of October 26 when this article was written, there is now $11.23 billion worth of assets locked in DeFi. Uniswap currently has the largest share of the market at $2.70 billion, but Maker is not far behind, at $2.07 billion.
While the market is generally continuing to trend in an upward trajectory, there are still days where things trend downwards. Just yesterday, there was more than $12 billion in DeFi. And last week, the market dropped 25.1% in a single day, perhaps a correction of summer gains. Significant drops always lead to a bit of doom-and-gloom reporting, but currently, it does not look like these temporary decreases are anything more than normal market fluctuations, and DeFi still seems to be growing.
Hacks keep coming
Unfortunately, the growth of DeFi continues to make it a popular target for hackers. Just today (still the 26th of October), it was reported that Harvest was the victim of an attack, losing $24 million to a hacker, who oddly returned $2.5 million of the stolen assets shortly thereafter. Harvest believes they know the identity of the hacker and has placed a $100,000 bounty for the person or team who successfully reaches out to the hacker. We’re used to bounties in the crypto world, but usually they’re for finding bugs, not tracking down hackers. Bounty hunters looking for cryptocurrency hackers feels like the plot to a cyberpunk novel or movie, not a real-life news story, but that’s 2020 for you.
Not surprisingly, this hack caused a significant drop in the value of Harvest’s native token, Farm. According to CoinGecko, the token is down 55.6%. These sorts of attacks damage consumer trust, and cause significant losses for token holders. What is DeFi going to do to prevent these events in the future?
And now there’s DeFi trading cards
Many dapps in the DeFi ecosystem look to either solve a financial problem, or to provide users a way to make money. Others just seem honestly gimmicky.
Take the idea of non-fungible tokens (NFTs). NFTs are a great idea. They can represent unique digital collectibles, or they can be tied to a physical object, such as a work of art, antiquity, or other rare item, holding information about its provenance. Widespread use of NFTs could cut down on counterfeits, art theft, and more. They could also provide a record of an item’s history, which could be of great interest to future historians. It’s a cool technology.
But on the digital collectible side of things, it can get a bit ridiculous. Recently, Meme Ltd released a series of NFT trading cards representing creators of different DeFi projects. A cute idea for crypto enthusiasts, right? Except the cards are now priced at tens of thousands of dollars. For digital collectibles. Representing people who nobody outside of the DeFi industry has likely ever heard of.
This sort of story straddles the line between amusing and ridiculous. It’s going to be hard to get people to take DeFi seriously when they hear about things like Harvest’s attack and virtual trading cards selling for $20,000.
What is DeFi going to do next?
What does the future hold for DeFi? I’m not in the job of making predictions (go ahead, look back at my ridiculous forecast for 2020 when we’d never heard of COVID-19). What I can say is that it looks like DeFi is going to continue to try crazy things, it’s going to continue to suffer arbitrage attacks, and people are going to continue to believe in it anyway, to see the good and the possibilities, and to help it grow into a more mature and respectable industry. What is DeFi going to do next? Probably whatever it wants.