DeFi: Token prices on the rise and a potential threat to the sector
The DeFi sector reports back and some tokens shoot up. Once again this week, a lot has happened in the up-and-coming Ethereum (ETH) industry and there were a few surprises.
Last week, the DeFi sector suffered significant setbacks. Many token courses plummeted and there were only a few winners. This week, things looked different. Sushiswap (SUSHI), Yearn.Finance (YFI), Compound (COMP) and Aave
Especially the „ETF token“ DeFi Pulse Index (DPI) was able to benefit from Crypto Investor this. The DPI token tracks the 11 largest DeFi projects and combines them in an index. It can thus serve as an indicator for the development of Decentralised Finance.
DeFi Pulse Index (DPI)Tokensets: DPI price
DPI rose by almost 20 per cent this week and is trading at $108 at the time of going to press. AAVE, YFI and COMP are largely responsible for the increase in the index token.
In addition, the total capital tied up in decentralised finance also developed positively.
According to DeFi Pulse, there are currently more than 14 billion US dollars in the emerging ethereum sector. This puts the decentralised finance industry at a record level.
Yearn.Finance cooperates with Sushiswap
The Yearn.Finance project, which became known in 2020, cooperates with the decentralised exchange (DEX) Sushiswap. The two projects intend to work on joint projects and Sushiswap is to help in particular with the development of the YFI project Deriswap. Deriswap is a DEX, which wants to unite different areas of the DeFi-Space in one and should enable among other things margin trading, swaps and much more.
Yearn.Finance has recently been on a massive expansion course. In recent weeks alone, the project has announced further collaborations with PickleFinance, CreamFinance, Cover and Akropolis. But especially the SUSHI course could benefit dramatically this week. In the last seven days, the SUSHI course rose by more than 40 percent.
Aave protocol starts V2 update
Meanwhile, Aave is introducing some new functions for the DeFi protocol, which should bring enormous added value to the entire Decentralized Finance sector. In the following we will take a look at the most important innovations.
Flash loans were the first undercollateralised loans to shake up the DeFi space, often with negative consequences for the inefficiency and errors of DeFi projects. One example of this is the DeFi project Harvest Finance, which lost almost US$ 24 million in a flash loan attack.
With the V2 update it should now be possible to use Flash Loans even easier. Originally four transactions were required for a Flash Loan, but the new update should make this possible in a single transaction, which dramatically reduces the cost of using a Flash Loan.
In addition, it is now possible to use Flash Loans with multiple tokens. As a result, users can now access the entire liquidity of a DeFi protocol. In the future, it can therefore be expected that the market efficiency can be further increased by the Flash Loan upgrade. Unfortunately, however, it is also to be feared that DeFi protocol gaps will be exploited even more radically and that inattention to smart contract programming will lead to even more fatal Flash Loan attacks, which will deprive the users of Decenralized Finance of their hard-earned money.