Decentralized Finance certainly blossomed in the past year as a craze developed over the potential DeFi could have on our traditional financial space. However, as the excitement grew, issues around its implementation cropped up.
DeFi, currently, relies heavily on the performance of the Ethereum blockchain but this chain has been inundated with high gas fees with the increased usage and interest through DeFi. This conundrum has led to a number of hurdles cropping up to the determinant of growth in the space.
However, according to PrimeXBT analyst Kim Chua, new upgrades on Ethereum could spell the start of a positive summer for DeFi.
After consolidating for almost three months, with ETH’s Berlin upgrade to reduce gas fees successfully deployed, ETH-based DeFi tokens have surged between 10 to 50% in a span of 3 days and rightfully so since high gas fee is the biggest problem preventing ETH-based DeFi projects from taking off in a bigger way, explained Chua.
With a solution to the problem that plagues most DeFi platforms since ETH-based projects still command around 70% of the market, DeFi tokens should rule the altcoin market as we move into Summer. Reminiscent of last year’s DeFi Summer, we are likely to see a way bigger DeFi Summer this year since we are in the midst of a bull market and DeFi has gained a lot of visibility this year compared with last year.
Other than ETH-based projects, this year also sees the rise of Binance Smart Chain (BSC) -based projects like PancakeSwap, Venus, BakerySwap, etc, who are gaining a lot of traction. According to data, TVL in DeFi has grown significantly in April, from around $90b as at the end of March to around $121b now. This is an impressive growth of 33% in just 3 weeks.
With TVL increasing at such velocity, expect prices of DeFi related tokens to really take off again. The market selloff on Sunday is a great opportunity for investors to load up on tokens of good DeFi projects if they have not already purchased them, and a good chance for already invested ones to add on to their portfolio.
About Kim Chua, PrimeXBT Market Analyst:
Kim Chua is an institutional trading specialist with a track record of success that extends across leading banks including Deutsche Bank, China Merchants Bank, and more. Chua later launched a hedge fund that consistently achieved triple-digit returns for seven years. Chua is also an educator at heart who developed her own proprietary trading curriculum to pass her knowledge down to a new generation of analysts. Kim Chua actively follows both traditional and cryptocurrency markets closely and is eager to find future investment and trading opportunities as the two vastly different asset classes begin to converge.