DeFi

Sustained growth thanks to organic demand

Published

9 months ago

9 May, 2024

Sustained growth thanks to organic demand

In today’s Crypto for Advisors newsletter, Index Coop’s Crews Enochs discusses the rebirth of DeFi Yield and how it will be organic this time. DJ Windle answers questions about DeFi investing in Ask an Expert.

In previous cycles, DeFi returns were largely paid in the form of new, worthless, inflationary governance tokens. The result was an initial burst of unsustainable activity on the new protocols and gains for early movers. Everyone else was left holding the bag.

As returns on digital assets have soared in recent months – yield rates on stablecoins and ETH hovered above 20%, far outpacing the base rate of traditional finance – some have expressed skepticism regarding this new cycle of yield farming. But even if inflationary dynamics have an impact on current agricultural trends, rates of increase are generally driven by organic and more sustainable demand than in past cycles.

Until early 2023, liquid staking yield was the benchmark rate for digital assets and the only organic yield remaining, as borrowing demand dried up during the bear market. While cash down rates have exceeded the federal funds rate for much of 2022, last year’s rate hikes have made cash down unattractive. Nonetheless, liquid staking remains a solid organic option for digital asset users who do not want to move their capital off-chain.

As market conditions began to improve in the first quarter, yields on digital assets have started to climb. At the end of April, enterprising digital asset users could earn over 31% APY on Ethena, Maker increased the DAI savings rate up to 15%, and lending protocols Aave and Compound offer 6-10% to lenders.

While these opportunities are undeniably attractive, digital users who remember previous cycles may wonder where these returns are coming from.

For the most part, stablecoin and ETH returns come from interest paid to lenders by overcollateralized borrowers. Stablecoins in particular are the most liquid and in-demand asset in the digital asset ecosystem, and users borrow them to increase their exposure to their favorite asset.

At the high end of the risk/reward continuum, some of the biggest opportunities come from speculating on points. The enthusiasm for Layer Clean Points, most notably, has driven up ETH loan yield rates, as speculators anticipate an EIGEN token airdrop later this month. Interest in a potential decline in Ethena has boosted demand for stablecoins. Although airdrop speculation is undeniably inflationary, borrowers pay real interest on stablecoins or ETH which lenders can now make as profit. Learn more about Airdrop Points here.

Digital asset users who want to lend directly to EigenLayer and Ethena point farmers can use protocols like Gearbox. Given the extreme craze for point farming, borrowers are not cost sensitive and are willing to pay more than 30-40% to finance their leveraged point farming.

Users who are uncomfortable with lending against new exotic assets, like Ethena’s sUSDe or liquid buyout tokens, can lend through proven protocols like Compound and Aave. Ethena and EigenLayer assets have not been included as collateral for Aave and Compound, where ETH, staked ETH, and USDC remain the primary forms of collateral. Nonetheless, Aave and Compound benefited from the side effects of interest in points farming, as well as overall price improvement in the first quarter.

Regardless of the platform or protocol, all crypto loans are over-collateralized, which mitigates risk for lenders. That said, lenders run the risk of borrowing drying up regardless of the protocol they use, leading to lower yields.

Overall, market watchers expect speculative fervor to drive borrowing demand in the coming quarters. Given the cost insensitivity of borrowers participating in leveraged point farming and other speculative investments, the opportunities for lenders are significant. While conservative users of digital assets rightly worry about unsustainable returns, current lending infrastructure better insulates risks. For digital asset users who are not comfortable with new primitives, lending offers the opportunity to benefit from borrower enthusiasm.

Q. How might new government regulations affect DeFi investing?

As DeFi platforms mature, government oversight is expected to increase. This could lead to the implementation of standardized regulatory frameworks, which could include stricter KYC and AML policies. While these measures are designed to protect investors and prevent illicit activity, they could also limit the anonymity and flexibility that many DeFi users currently enjoy. For the average investor, this means a safer but potentially more cumbersome investment process.

Q. What changes from traditional banks are involved in DeFi?

The involvement of traditional financial institutions in DeFi could bring a mix of innovation and stability to the ecosystem. Banks can provide risk management expertise and access a broader customer base, which could lead to an increased influx of capital into DeFi. However, this could also lead to lower returns due to the conservative nature of traditional banking.

Q. Do DAOs impact DeFi yields and security?

DAOs (Decentralized Autonomous Organizations) are an integral part of the governance of many DeFi protocols, providing a level of transparency and community involvement never before seen in traditional finance. They allow stakeholders to vote on key decisions, including those affecting rates of return and security measures. This can lead to more aligned interests between users and developers, which could result in more robust, user-centric platforms.

Franklin Templeton believes Solana will be the next big cryptocurrency and will probably occupy 3rd place.

Loyalty says retirement plans are starting to explore crypto investments, albeit slowly.

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DeFi

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Published

6 months ago

29 July, 2024

CoinFlix Staff

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Bonk and Pepe appear set to net new investors 10x to 100x returns over the next 12 months. However, cryptocurrencies in the DeFi play-to-earn gaming sector could offer even greater returns. As August approaches, Rollblock is emerging as a standout DeFi play-to-earn gem with the potential to 100x-1000x gains in the fourth quarter and beyond.

The project features an innovative revenue sharing model and exceptional accessibility, attracting players and investors. Additionally, Rollblock’s extensive game library of over 150 titles and enhanced sports betting are further driving excitement for the platform. Cryptocurrency analysts are expecting a sudden surge in demand. 800% a push for Rollblock from the beginning of September.

Bonk remains strong despite market fluctuations

While most well-known cryptocurrencies struggled throughout July, Bonk remained strong. As one of the highest-grossing meme cryptocurrencies of 2024, Bonk rose over 24% in July, while most cryptocurrencies experienced negative fluctuations.

Investors looking to add a relatively safe memecoin to their portfolio should consider Bonk. While Bonk is unlikely to generate explosive gains of 250x to 1,000x from here on out, Bonk could still theoretically provide returns in the 20x to 100x range.

Pepe should see a big rise in the next bull run

Alongside Bonk, Pepe has yet to go through a bull run. This means that there are still substantial gains to be made from Pepe over the next 12 months.

Pepe is down 4% in 30 days, but that shouldn’t worry Pepe investors in 2024. Experts believe Pepe’s best days are still ahead, with crypto analysts predicting a 10x to 50x surge in the next election cycle around November.

In the long term, Pepe could surpass the 100x mark for today’s investors. However, Pepe is a memecoin, and one should exercise caution when investing in purely speculative assets that have no utility.

Rollblock’s Unprecedented Hype Potential Could Push It Past 100x Valuation in Q4

Rollblock is a GambleFi Play-to-Earn token that integrates centralized and decentralized gambling on a single platform. By allowing players to earn rewards through active participation and gameplay, the platform creates a compelling incentive structure that appeals to both casual and competitive players.

With its cutting-edge blockchain technology, Rollblock offers top-notch security that keeps bets and transactions on the platform secure. The platform’s lack of KYC mandates appeals to both users who value anonymity and security.

Rollblock’s revenue sharing model, which allocates up to 30% of casino revenue to RBLK token holders, is a major draw for investors. The model involves burning half of the repurchased tokens and distributing the other half to stakers, increasing the token’s value and encouraging long-term investment.

The platform is also constantly evolving thanks to user feedback which has enabled updates such as the upcoming sports betting feature within the platform’s casino. This addition will complement Rollblock’s extensive game library of over 150 titles, ranging from traditional poker to innovative blockchain-based games.

RBLK is expected to emerge as one of the leading DeFi tokens in 2024. With a price of $0.0172 with impressive growth potential and over 140 million tokens sold recently, Rollblock is on track to enter the top 100 cryptocurrencies by Q4, making today a lucrative time to buy RBLK tokens.

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DeFi

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Published

6 months ago

29 July, 2024

CoinFlix Staff

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Veteran cryptocurrency investor Arthur Cheong believes the digital asset sector offers long-term holders a golden opportunity.

Cheong, the founder of DeFiance Capital, tell His 171,700 followers on social media platform X indicate that he believes decentralized finance (DeFi) is hugely undervalued.

According to Cheong, DeFi projects are innovating at a rapid pace and leaving traditional financial (TradFi) companies in the dust.

“It’s been a long time since I’ve been this excited about the risk/reward and potential upside of DeFi. This is probably the most misjudged moment since the pre-DeFi summer of 2020, with extremely promising prospects.

I see opportunities not only in OG (original) DeFi, but also in some newer projects that are evolving rapidly and growing at a pace that fintech startups will do anything to match.

The veteran investor also believes that crypto is now here to stay following recent launch from the Ethereum spot market (ETH) exchange-traded funds (ETFs) last week.

“Overall, the floodgates are open and there is no turning back. TradFi asset managers will continue to launch new crypto products because, guess what: there is huge demand for them!”

I expect them to launch actively managed crypto ETFs [in the] coming years. ”

Earlier this month, Cheong laid that it might be a bad strategy for cryptocurrencies to seek mass adoption, believing that digital assets are designed to disrupt several key financial sectors.

“I think we should accept that cryptocurrencies may not be suited for mass adoption like Web2, but rather are optimized for some narrow but very high-impact use cases like stateless global money, cross-border payments, and decentralized finance.

Chasing mass adoption of normies may be chasing the wrong Grail from the start.

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