Data from Messari shows that over the past 30-days the majority of tokens listed on the site’s DeFi Assets index have rallied by more than 20%. A few standouts like Maker (MKR) Synthetic (SNX) and SushiSwap (SUSHI) gained more than 100% during the same time frame.
From Jan. 1 to Jan. 9, the decentralized finance sector saw its total value locked (TVL) rise from $15.678 billion to a record-high $23.092 billion and this recovery to a new all-time high came about 4 months after the DeFi bull market abruptly came to an end.
Now that Bitcoin (BTC) and Ether (ETH) have rallied to multi-year highs, investors are again turning their attention to the DeFi sector and its likely that the start of a new bull market, soaring TVL at the top DeFi platforms and the steady integration of Ethereum alternatives are the primary reasons for the current surge.
Bitcoin and Ethereum carry the market higher
The last few months of bullish price action from Bitcoin and Ether are undoubtedly having a positive effect on the entire cryptocurrency market. Currently, the combined market cap of the top two digital assets is more than $850 billion, comprising 80% of the total value of the cryptocurrency market.
As the price of the top cryptocurrencies rise, some investors look for ways to maximize their profits and the high staking yields and four-digit investment returns offered by many of the small cap tokens have proven to be an irresistible lure to traders.
Historical data shows that when Bitcoin and Ethereum price are rallying, altcoins tend to follow and when Bitcoin consolidates in a ‘predicatable’ range, altcoins and DeFi tokens usually rally. This market dynamic could partially explain the recent surge in DeFi tokens.
Total value locked is on the rise
Data from DeFi Pulse shows that the total value locked across DeFi protocols increased from $15.36 billion to $22.74 billion over the past 10 days. This sharp increase in TVL coincides with Bitcoin’s rally from $29,000 to it’s $41,950 all-time high and during the same time Ether price also rose from $740 to $1,300.
A number of high profile partnerships and mergers between some of the top-ranked DeFi protocols is also attracting new funds to the DeFi sector. In early December, Yearn.finance and SushiSwap, two of the top DeFi projects, announced a merger that saw the protocols develop resources and integrate their liquidity pools to increase the total value locked.
Developments like this help to create a safer and more efficient user experience for members of the community and in this instance helped lead to a rise in the YFI price from $18,255 at the beginning of Nov. 26, 2020 to the Jan.9 swing high at $39,990, an increase of 118%
Increasing DEX volume
Volume and transactions are key metrics used when evaluating the value of a DeFi project and the strength of its community. One way to determine this is to look at the daily volume of a project’s Decentralized Exchange (DEX) to get a picture of how much value is transacted on the protocol during a particular time frame.
Since the start of 2020, the daily DEX volume for the top-ranked DeFi projects has more than doubled from $900 million on Jan.1 to a peak of $2.4 billion on Jan. 4, indicating a significant increase in user activity. This suggests that traders took advantage of the bull market conditions that much of the cryptocurrency market was experiencing during that time.
With Eth2 still rolling out, a critical issue to monitor during any DeFi boom is Etheruem gas fees and transaction speeds. Messari data also shows that DeFi tokens focused onLayer 2 solutions rallied strongly as developers search for ways to successfuly integrate faster, lower fee off-chain options which can work as alternatives to Etheruem.
Stellar Lumens Price Analysis: 24 January
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Stellar Lumens had neutral momentum in the market over the past two days, and only in the last few hours did the coin see a shift in momentum in favor of the bulls. This shift in sentiment indicated a move to the upside for XLM.
EOS 1-hour chart
Since the first week of January, XLM has been trading within a range from $0.233 to $0.313. On the hourly chart, levels associated with this range have become important due to the timeframe of the price action.
The 50% level of the range, $0.271, is the most important level within the range – a rejection at, or an ascent above, is a good indication of market sentiment. Stellar Lumens showed some strength as it rose above the mid-point of the range it was trading in.
The RSI, which had been choppy about the neutral 50 value, rose above it to denote short-term bullish momentum. The MACD formed a bullish crossover as well and climbed above the zero line.
The Bollinger bands’ width indicator reached a low on the 24th and has increased ever since to show that volatility was slowly rising.
The trading volume also saw a slight uptick as the price rose above the mid-point. Taken together, the indicators all showed that a move upward was likely for XLM. Generally, bulls claiming the mid-point will result in bulls driving the price upward to test the range highs.
A retest of the same level would offer an ideal entry to a long position while slipping beneath this level would invalidate bullish strength.
A retest would be an ideal long position entry. The $0.29 level could offer some resistance to XLM and would be a place to take some profits at. Losing the mid-point of the range will not only invalidate this notion but also indicate that a move to the range lows was on the table.
Is Bitcoin a waste of energy? Pros and cons about Bitcoin mining
Bitcoin arouses passion, curiosity and has received more and more media attention, especially after having climbed the ranks of the best financial asset of the decade. However, whenever its price goes up, many doubts and questions arise, mainly around its origin and the energy expenditure by miners.
The Bitcoin protocol has created a unique digital asset
Before Bitcoin, there was neither a digital value to be transferred nor a digital asset to be divided into several parts. That is, if you scanned a $100 bill and wanted to transfer this bill to someone, you could only send a copy of this bill.
We are all used to smartphones and computers already. We send emails, photos, but we don’t realize that process in reality: We send a copy of the email (and not the original email), a copy of our photos (and not the original). When we click the send button on a smartphone or computer, a copy of the original will always remain on our device.
Likewise, regarding financial transactions, when we click on the send button in our internet banking accounts or at an ATM, there is always an intermediary that transfers the money from one account to another. And that’s the problem Bitcoin aims to solve — the double-spending problem.
When you click the send Bitcoin button on your cell phone, for example, you are not sending a copy, you are actually sending a digital object. Once a transaction is made in Bitcoin, it becomes irreversible and cannot be tampered with.
For that reason, it is impossible to cancel or reverse a Bitcoin transfer after it has been validated by the blockchain network because the Bitcoin protocol has solved the problem of double-spending. It made a single asset, Bitcoin, digitally unique, enabling value transactions on the internet without intermediaries (independent of a central entity).
Who issues Bitcoins?
While traditional money is issued (created) through (central) banks, Bitcoin is issued by algorithms, whose rules are pre-established in its protocol — the Bitcoin blockchain.
In turn, the Bitcoin blockchain is a transaction registration system, maintained in an open (distributed) network of “suspicious” participants, who do not know or trust one another.
So, when Satoshi Nakamoto wrote the source code for the Bitcoin protocol software and published it on the internet, he proposed the following: If you provide security for this network and help this financial network to operate, you will be rewarded.
The logic of the pre-established rules in the Bitcoin protocol was very transparent and was written in a programming language. The breakthrough brought by the first blockchain, after years of research on digital currencies, is not just about computer science solutions.
The secret is in incentives
To create the Bitcoin blockchain architecture, Satoshi Nakamoto looked at existing research — bit-gold, b-money, hashcash, time-stamped cryptography — and added game theory.
Using game theory, Satoshi implemented an incentive mechanism (consensus mechanism) called proof-of-work that enabled a new field of economic coordination, now called “cryptoeconomics” (the fields of economics and computer science to study the decentralized marketplaces and applications that can be built by combining cryptography with economic incentives).
It is this economic incentive system that ensures that Bitcoin network participants behave in favor of the security and the perfect functioning of the system. This is the main reason why the Bitcoin blockchain has yet to be hacked.
The importance of mining
As more and more people realized the potential incentives in Bitcoin and started to “plug in” their computers to provide security to the network, the Bitcoin blockchain became more and more viable and secure. Now, there is enormous computational power guaranteeing transactions: Bitcoin is computational strength.
A Bitcoin is “extracted” from the blockchain protocol by miners (validators) who need to solve mathematical algorithms to earn the right to include Bitcoin transactions in the blockchain network and be rewarded for it.
Each Bitcoin transaction, before being added to the blockchain, is sent to the “mempool,” a retention area for pending transactions, where it awaits its inclusion in a block. The miners then take the pending transactions, which are waiting to be recorded, and combine them to create a “block” of transactions.
Realize that the miners compete with one another so that their computers are chosen to record the most recent transactions in the next block that will be included in the network. And the best way to win this competition is by solving the algorithms as many times as possible (before someone else reaches the correct result, called a “nonce”).
As it takes trillions of attempts to guess the correct nonce, only those who have more computational strength to win this competition will be awarded Bitcoin as a reward for their efforts.
We can draw two main consequences from what we have said so far.
The first consequence is that PoW prevents miners from circumventing the system and creating Bitcoin from scratch. Miners must burn real computing energy with each attempt and find the nonce to have a chance to win Bitcoin. As electricity to supply miners is not free, proof-of-work, therefore, generates a financial cost for Bitcoin mining.
The second consequence refers to the fact that PoW makes Bitcoin’s transaction history immutable. If an attacker tries to change a transaction, that attacker will have to redo all the work that has been done since then to recover and establish the longest network. This is theoretically impossible and that is why miners are said to “protect” the Bitcoin network.
As mining has become a legitimate industry over the years, it is supported by dedicated professionals with specialized hardware, which requires large data centers and a lot of electricity.
It is worth mentioning that although there are other consensus mechanisms, PoW is the most used in blockchains because it is the most effective in terms of cybersecurity.
How much electricity does Bitcoin mining use?
Cambridge University has been operating a live Bitcoin network energy estimator since 2015. In fact, Bitcoin’s transparency allows anyone to see the amount of hash power applied to the network, which is usually measured in the number of hashes per second that the network is performing as part of the mining process.
You can estimate how much power the network is using to perform these hashes based on the energy efficiency for hashing the mining hardware in use.
According to Digiconomist’s Bitcoin energy consumption tracker, mining currently consumes 77.78 terawatt-hours per year. That is comparable to the total energy consumption of countries such as the Netherlands and the Czech Republic.
Based on the above estimates, many argue against Bitcoin and the use of proof-of-work.
However, can we take these “estimates” as an absolute truth? Do these estimates take into account that miners do not always operate with the same efficiency? Is it being considered that the electricity used may be coming from clean sources?
Let’s look at these arguments one by one.
The arguments against proof-of-work and the incentive mechanism created by Satoshi Nakamoto are:
- A1 — Bitcoin mining consumes a lot of energy.
- A2 — The vast majority of Bitcoin miners are located in China.
- A3 — Bitcoin miners in China are mainly using dirty coal-based energy.
- A4 — Bitcoin mining has a comparatively extreme carbon footprint.
- A5 — Bitcoin is bad.
Argument A1 is true, as we demonstrated in the previous topic. It is one of the fundamental reasons why the Bitcoin network is so incredibly secure.
Argument A2 used to be true, but the situation is changing, as more regions globally are entering the BTC mining industry. As this does not matter for energy consumption by the Bitcoin network, we will consider it to be true.
Regions with great relevance are highlighted in teal, the Sichuan province in China is in yellow, and regions with lesser relevance are in red.
Finally, the argument A3 is false, as we will see in the next topic, which debunks arguments A4 and A5.
Bitcoin is an energy hog, but… renewable
A recent research published by CoinShares Research found that most of the electricity consumed to mine Bitcoin, in fact, comes from clean sources, such as wind, solar and hydroelectric.
To be more specific, 60% of global mining takes place in China, where Sichuan alone produces 50% of the global hash rate, with the remaining 10% divided more or less evenly among the Yunnan, Xinjiang provinces and Mongolia.
It is important to note that the dominance of Sichuan both in China and in the world has a direct relationship with the hydroelectric-rich provinces of Yunnan, Guizhou and Sichuan in southwest China. During the rainy season, its electricity prices are among the lowest in the world, making Sichuan one of the most attractive global mining regions available.
On the other hand, of the remaining 40% of mining companies, 35% of the global hash rate production is equally divided among Washington, New York, British Columbia, Alberta, Quebec, Newfoundland and Labrador, Iceland, Norway, Sweden, Georgia and Iran.
Still, the report points to a broader problem of how renewable energy is currently deployed worldwide: Many renewable energy generators are poorly located and underutilized, and thus, Bitcoin mining has become the only viable use for this electricity.
In this context, the research concludes that the Bitcoin network obtains 74% of its electricity from renewable sources, making it more focused on clean energy sources than almost all other large-scale industries in the world.
Everything requires energy, and the additional use of energy has always improved our standard of living. Are the benefits provided by Bitcoin worth the additional use of energy? Are miners no longer looking for ways to reuse wasted energy, for example, the CO2 released during oil drilling?
Since the physical location of mining centers does not impact the Bitcoin network, are miners no longer migrating to areas that generate surplus electricity at lower marginal costs? And in this case, this could not solve the problem of renewable energy that has a predictable capacity and would otherwise be wasted, such as hydroelectric and methane burning.
Everything is energy — the waste is in not using it intelligently to improve economic and social living standards.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Tatiana Revoredo is a founding member of the Oxford Blockchain Foundation and is a strategist in blockchain at Saïd Business School at the University of Oxford. Additionally, she is an expert in blockchain business applications at the Massachusetts Institute of Technology and is the chief strategy officer of The Global Strategy. Tatiana has been invited by the European Parliament to the Intercontinental Blockchain Conference and was invited by the Brazilian parliament to the public hearing on Bill 2303/2015. She is the author of two books: Blockchain: Tudo O Que Você Precisa Saber and Cryptocurrencies in the International Scenario: What Is the Position of Central Banks, Governments and Authorities About Cryptocurrencies?
The DeFi Powerhouse That Keeps on Growing
ZENTEREST was recently added to MANTRA DAO’s rapidly expanding suite of DeFi protocols
We have seen decentralized finance grow exponentially in recent months and the TVL (total value locked) in DeFi protocols now stands at a jaw-dropping $24 billion. Amongst the projects that have contributed to the sector’s explosive growth in recent months is MANTRA DAO, a community-governed and decentralized DeFi platform that offers its users a wide range of services including staking, lending, stablecoins, derivatives, governance, grants, and custody.
Following its successful token launch, MANTRA DAO continued to make noise in the space throughout December, announcing a flurry of partnerships with the likes of BAND, LUNA, and KAVA being added to the list. As well as joining forces with some of the most exciting projects in DeFi, MANTRA DAO also began announcing the rollout of various DeFi products on its platform including soft governance, which allows the MANTRA DAO community to vote and propose changes to various aspects of the ecosystem.
In December the project reached a particularly notable milestone, with over 100 million OM tokens being staked natively on the MANTRA DAO staking platform since it’s unveiling just 2 months previously. The community was rewarded for being an integral part of the project’s success with the opportunity to own one of 88 rare MANTRA DAO NFTs being sold on NFT platform Rarible. The event sold out in 30 minutes, and proceeds from sales went back to the community.
One of the most exciting features to be announced in recent weeks by MANTRA DAO was their decentralized lending protocol ZENTEREST, which is an overcollateralized, money market, lending protocol enabling users of the platform to supply, borrow and use their crypto assets as collateral.
The Beta version of ZENTEREST was launched at the end of December 2020 and is a fork of both Compound Finance and Cream.finance, two well designed and successful lending protocols that have become popular in the DeFi space. Although utilising the best of both protocols, ZENTEREST will have its own unique set of listed assets that can be used for borrowing, lending, or the two combined. Various assets including the MANTRA DAO native OM token, ETH, wBTC, LINK, COMP, USDC, DAI, SNX, UNI, SUSHI, AAVE, LINK, YFI, 1INCH, and other smaller upcoming projects such as POLS, DSD, BONDLY, RSR, ROYA, etc. are available to users.
This is the first of various lending products planned to become available on the MANTRA DAO platform, with the second taking shape as a proprietary multi-asset CDP/stablecoin. KARMA Protocol, a decentralized credit rating system will be the third, and these products are set for release in Q1 and Q2 of this year respectively.
Developed to leverage the “knowledge and wisdom of the crowd”, MANTRA DAO is currently in the Parity Substrate Builders Program and besides offering a diverse range of DeFi products and services to its community, MANTRA DAO is a validator for several projects including BAND, Terra, Matic, ATOM, and most recently e-Money, a platform offering currency-backed, collateralized stablecoins.
MANTRA DAO is so far successfully delivering on promises outlined on a lengthy roadmap; the launch of lending products is another win for the platform’s already thriving community. With the future of DeFi looking more promising than ever, MANTRA DAO is set to become one of the sector’s success stories on the road to trustless, inclusive, and globally accessible financial products.
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