Friday, November 27, 2020

Institutional money is pumping the DeFi markets back up

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Institutional money appears to be flowing into the decentralized finance (DeFi) sector, with Yearn Finance (YFI) among the top beneficiaries.

According to crypto market data aggregator IntoTheBlock, on-chain transactions of $100,000 or higher have increased by 282% over the past week — including nearly $134 million worth of activity on Nov. 10 alone.

Volume of on-chain YFI transactions exceeding $100,000 in value: IntoTheBlock

According to crypto market analysis firm Messari, YFI was the top performing DeFi asset of the past week, followed by yAxis with a 78% gain, Loopring with 50%, and Akropolis and Curve with 49% each. However, the DeFi turnaround is very recent and only 11 of 41 DeFi tokens tracked by Messari are up over the last 30 days, while 22 have posted price gains for the past 12 months.

On Nov. 12, Messari identified that Polychain Capital had emerged as the 10th-largest YFI holder despite holding zero YFI tokens until October. Polychain currently controls 470 YFI or 1.6% of the token’s supply.

Polychain is accumulating several other top DeFi tokens including Compound (COMP), Maker (MKR), Filecoin (FIL), Orchid (OXT), and 0x (ZRX).

While YFI was among the markets hardest by DeFi’s sector-wide pull-back from mid-September through early November — shedding 80% of its value from roughly $43,300 on Sep. 13 to $8,550 on Nov. 6 — Yearn has rebounded by more than 95% over the past week to currently trade for $16,600.

Last month, published the findings from a survey of 411 “decision-makers” representing traditional financial institutions familiar with DeFi, indicating significant investment into the sector from mainstream entities.

58% of respondents expressed concern that they “will lose a competitive advantage” if they fail to engage with DeFi products, and 61%  represented companies that were “considering adopting DeFi as a way to execute financial services with smart contracts.” 35% of respondents stated they are currently collaborating with an existing DeFi platform or service.

However, the survey also found that 61% of respondents believe the lack of regulatory oversight for DeFi is a major challenge to the sector’s growth.