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Is it time to take DeFi Seriously?

flipsidecrypto Oct 13, 2020

Bitcoin is the blockchain everyone knows. It was the first cryptocurrency and blockchain platform, and as such it remained synonymous with the idea of digital currencies. Its fame and OG status have kept it in first place in terms of market capitalization (= number of coins x price), which has grown to over $213 billion

But Ethereum is the one everyone is using. Ethereum was the first to introduce a blockchain system that could also facilitate all sorts of “decentralized applications”, or dApps. It opened the door for all of the blockchain use cases that Bitcoin, which is only intended for the transfer of its digital asset BTC, doesn’t allow for. 

$300MM Is Sent Daily to DeFi Applications 

Ethereum is an especially powerful platform for building Decentralized Finance (DeFi) applications. A zoomed out view of all ETH and wETH activity on Ethereum reveals that more transactions are happening on decentralized platforms than on centralized exchanges. 

To be exact, $300 million worth of ETH and WETH are sent daily to decentralized finance applications and exchanges, versus $156 million to centralized ones. 

70% of Which is Going to Uniswap 

Uniswap is a decentralized exchange built on Ethereum, where users can exchange cryptocurrencies without the need for a third party. As its founder, Hayden Adams, explains below, Uniswap is an immutable smart contract, which means it cannot be changed by a party unilaterally.

Uniswap currently dominates the DeFi space – over 70% of daily deposits to decentralized finance applications are going to it ($211M out of $300M total). 

Why Bitcoin Maximalists Should Get on Board

There are certain individuals in the blockchain space who believe that Bitcoin will inevitably become a monopoly due to network effects, and that building any other project or cryptocurrency is not only futile, but unethical (see this post for a nice example). This line of thought is known as Bitcoin Maximalism, and its adherents are the only ones still denying the value of DeFi applications.

Tweeting below is Tone Vays, a former Wall Street trader and Bitcoin Maximalist (or “Shitcoin Minimalist” as he eloquently puts it). He doesn’t know what Uniswap is, but he probably should, considering these numbers. 

Bitcoin Maximalists are not taking DeFi seriously mainly because they can’t take part in it if they stay glued to the Bitcoin blockchain.

But the truth is, the number of Bitcoin holders who are moving their BTC over to Ethereum is rapidly increasing. We found that 385MM USD worth of wBTC + renBTC (which are Ethereum compatible BTC) was transacted daily on Ethereum in September.

That number was 131MM USD in August.

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