While Bitcoin continues to make headlines in the mainstream media, DeFi projects in the crypto industry are growing steadily in TVL. In the last twelve months alone, DeFi’s TVL increased from $ 1 billion to $ 40 billion, and this increase was approximately 3900 percent proportionally. This type of enormous growth is perhaps the biggest missed opportunity for traders with a portfolio lacking DeFi.
While major cryptocurrencies like Ethereum and Bitcoin offer high returns, DeFi projects like Polkadot, Chainlink, and Yearn.Finance can give you similar or even better results.
In response to the 20% increase in the bitcoin price, the value of DeFi projects also increased by 200% or more. This is evidenced by the increase in TVL and weekly and 24-hour returns from many DeFi projects on the market. As most investors are drawn to Bitcoin due to its volatility and faster returns, DeFi projects are an ideal ground for investments and make ideal additions for double-digit and more consistent returns on a trading portfolio.
Since 18.5 million Bitcoins have already been mined, the saturation in Bitcoin means the investment has flowed into altcoins and DeFi projects. Since the level of liquidity DeFi has is not close to that of Bitcoin, the focus may be on DeFi here, and this is good for the portfolio in the short term, as this makes DeFi projects more susceptible to dramatic price fluctuations in the short term.
It should be noted, however, that there are hacks and exploits on DeFi that, like the recent Yearn.Finance exploit, caused $ 11 million worth of crypto losses. Still, the price of YFI increased by 15.69% in a 24-hour period. Abuses and hacks in DeFi projects do not invalidate the ability to deliver double-digit returns in the short term; Several large projects are currently attracting institutional investment flows.
Despite repeated examples of abuse, investments in companies such as Sushiswap and Uniswap have increased significantly in the past 2 months.
It is also worth noting how the price of Bitcoin remains more or less on the limit after reaching a new ATH each time in this market cycle. However, this is not the case for DeFi.
The narrative remains the same, an increase in the price of Bitcoin leads to an investment flow into DeFi and Ethereum. Also, due to high volatility and limited liquidity, these projects yield double-digit or even higher returns.
In fact, in the last 30 days alone, the ROI on top DeFi projects is above double digits. More DeFi projects in a person’s portfolio can give the ability to circumvent corrections in the prices of Bitcoin and Ethereum, because the latter is more cyclical in nature.