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Market Watch: 10 DeFi Tokens To Watch In 2020

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Decentralized Finance
Decentralized Finance (DeFi)

Decentralized Finance (DeFi) coins are undoubtedly the best performing set of cryptos in the year 2020. Although there’s an existing deliberation on which Defi token actually takes the forefront in terms of the best performance, such credit wholly lies among the tokens that would be discussed in this article. 

The enlisted tokens have not been organized in any specific order, but they sure have a few unique mutual qualities including impressive prices, enormous monthly return, as well as terrific future prospects.

1. Chainlink (LINK)

The remarkable growth of this controversial coin cannot be ignored, as it has been steadily going like a bat out of hell since last year. The Chainlink network is designed to provide safe inputs and outputs crucial for sophisticated smart contracts that can be applied to real-world data and events.

Chainlink’s decentralized oracle network provides equal security as smart contracts themselves. There is no end to its amazing features, in fact, its decentralized economic system can even leverage oracles on the Ethereum blockchain. 

Much of the team’s success exists as an effect of ratifying several strong partnerships. The native token is LINK, which at the time of writing, is trading at $15.80 USD with a market capitalization of over 5 billion US Dollars.

Chainlink Historical Data (CoinMarketCap)
Chainlink Historical Data (CoinMarketCap)

2. Aave (LEND)

Lending: Aave is a non-custodial and open-source money market protocol through which users can earn interest on deposits and equally borrow assets. In this case, their native token, LEND is required. 

As of January 2020, its price was sitting at about $0.009, however, at the time of writing, it has managed to grow to $0.69 USD, having a market capitalization of $903,398,749. 

Aave historical data (CoinMarketCap)
Aave historical data (CoinMarketCap)

 

3. Maker (MKR) – Stablecoin and Decentralized Reserve Bank

This coin has been openly proclaimed the second-largest project within the Defi space. Maker is an Ethereum-based crypto project accountable for the DAI token. 

DAI stimulates financial freedom as it has virtually no instability and is integrated into over 400 apps and services (i.e. wallets, Defi platforms, games, etc.) For these reasons, many analysts are convinced that the MKR project is one to watch out for and that it may generate imminent returns within the next few days to weeks. 

This coin is among a distinguished few that sits at a high price per piece. Having a market capitalization of over  $686 million USD, MKR currently changes hands at about $682 USD.

Aave historical data (CoinMarketCap)
Maker (DAI) historical data (CoinMarketCap)

4. Synthetix Network Token (SNX) – Derivatives Synthetic Assets

Synthetix is a derivative liquidity protocol that facilitates the issuance and trading of synthetic assets. The Synthetix protocol makes use of two tokens. The first and more prominent is SNX which also serves as the major element used as collateral for supporting the Synthetix assets. 

SNX has had an upward trend since June 2020, and the trend hasn’t stopped ever since. 

According to coinmarketcap, SNX has a total market cap of around $600 million USD with its current value sitting at $6.82 USD. 

Synthetix Network Token (CoinMarketCap)
Synthetix Network Token historical data (CoinMarketCap)

5. Ampleforth (AMPL)

AMPL is a digital currency with fluctuating supply on a daily basis based on market conditions. The AMPL protocol changes in response to prevailing demand. This means that if it manages to increase in price, so will the amount of tokens in one’s wallet (the same applies when the price is down). 

AMPL can help to either diversify one’s portfolio or serve as reserve collateral in decentralized banks. It is considered “non-dilutive” because the differences are done in reciprocal proportions to guarantee that one’s ownership remains fixed. 

As at the time of writing, its values is $166, with a market capitalization of $360 million USD. 

Ampleforth historical data (CoinMarketCap)
Ampleforth historical data (CoinMarketCap)

6. Compound.finance (COMP)

Borrow and Lend: COMP is an ERC-20 token created off of the Compound protocol. According to the official website, about 2,880 COMPS are distributed to users – all comparable to the borrowing demand within the ETH, DAI, and USDC markets, among others. 

Many predict that its price will continue to increase as investors see its power and prospects.

After its launch in June 2020, investors were able to obtain each COMP for $65USD, and by mid-August, COMP had exceeded a value of $160.20 USD.

Compound.finance historical data (CoinMarketCap)
Compound.finance historical data (CoinMarketCap)

7. Kyber Network (KNC)

Kyber is a blockchain-based liquidity platform that can easily be combined with any application without an intermediary function. Kyber Network’s native token, KNC saw aggravated development in 2020. 

Although the price cannot be compared to that of January 2018, 2020 is definitive of the probability of the coin making an upward market move. The value of KNC currently sits at $1.69 with a market cap of about $334 million USD.

Kyber Network historical data (CoinMarketCap)
Kyber Network historical data (CoinMarketCap)

8. Augur (REP) – Prediction Markets

Augur is a limitless blockchain-based, peer-to-peer, decentralized betting platform powered by the Ethereum blockchain. Its native token, Reputation (REP) is used amid market dispute phases of Augur. All winnings generated are kept by the users. On the other hand, when one makes a wrong forecast, no fees will be earned, and this may result in the loss of REP tokens. 

This project is hot in the market, as forecasts can be made on almost anything. The price of REP developed to about $21.63 USD from the $9 of January 2020. REP currently has a market capitalization of around $237 million USD.

Augur historical data (CoinMarketCap)
Augur historical data (CoinMarketCap)

9. Dai (DAI) Stable Coin

DAI is a stablecoin supported against the USD. Therefore, the coin presents very slim earning prospects. However, there’s the need to cite it, particularly given its contribution towards decentralized finance and its very little market instability. 

Amongst the various stablecoins backed by USD, DAI proves unique due to its scalability and flexibility. Its price currently sits at $1.02, with a market cap of around $490 million USD.

Dai Stablecoin historical data (CoinMarketCap)
Dai Stablecoin historical data (CoinMarketCap)

10. Yearn Finance (YFI)

Yearn Finance is a decentralized financial ecosystem, where one can transfer funds, invest, and stake the YFI tokens. 

Introduced to the cryptosphere a little over a month ago at roughly $1,115 USD, today, it trading over $20,000 USD, with a market cap of about $900 million USD. 

Yearn.finance historical data (CoinMarketCap)
Yearn.finance historical data (CoinMarketCap)

The enlisted tokens on today’s market watch are majorly focused on upcoming Defi coins based on their market performances as well as anticipated prospects.

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Learning Guides

Understanding Speculation and Crypto Volatility

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Everyone who dabbles in the crypto industry learns almost immediately that the market is very volatile and oftentimes things can change very quickly. That volatility is the fundamental reason why some investors make absolutely stunning gains in so short a time and others lose a lot of money as well. Trading in crypto is one of the riskiest ventures any person can undertake and as they say, it’s not for the faint of heart. The risks can be mitigated of course and sometimes depends specifically on the coin or crypto asset being traded on, barring general market trends.

Nevertheless, to get to the bottom of the volatility concept, one must understand speculation in the market. To start off, the concept of speculation isn’t limited to cryptocurrencies, on the contrary, speculation has existed for as long as economics and trading has. But it is worth saying that speculation is often a feature of novel sectors, assets, commodities and the like. So, even though cryptocurrencies have been around for more than a decade, they’re still in their infancy as far as markets go. One could say that the market is still trying to find its feet.

One of the fundamental reasons why cryptocurrencies are so volatile is that they are fundamentally backed by nothing of value outside the attention that they get. Unlike many fiat currencies which are either pegged to another currency’s value or whose value is unilaterally determined by a central authority, cryptocurrencies only derive value as a function of how many people are willing to use is to transact, i.e. trust in the asset because other people trust it. As a rule of thumb, the larger the number of people who accept the asset, the more valuable it becomes.

This is one of the hallmarks of speculative trading. In the crypto world or in any market that’s novel and untested, many people are in it to win it which means their strategies in trade has the objective of making as much profits as possible in the short term. Therefore, the market enters a subtly dangerous cycle of rapidly changing prices of assets. Basically, investors typically buy assets when prices are low and wait. As more investors are attracted to the commodity for its low prices, it sets off a cascade where more people buy in, causing the price to steadily rise. 

However, all good things must come to an end and it almost always gets to a breaking point whereupon the price gets high enough for investors to begin to sell. This reverses the earlier cascade and as more and more investors pull out, the prices can fall dramatically causing even more to sell off in fear of losing whatever investments they have left. The prices having fallen resets the game and primes investors to begin buying again.

Volatility has been one of the talking points of many critics of cryptocurrencies often comparing it to a Ponzi scheme. And in certain cases, persons of interest with large pulls and audiences can substantially affect the rate at which prices rise and fall. Other factors include government regulations. Volatility at its core reflects the often chaotic nature of trade and market interactions and human hopes and fears.

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Market Watch

What China’s crypto clampdown means for investors

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Over the weekend, China, the biggest crypto mining country once again, began to clamp down on cryptocurrency. Ten Chinese agencies including the central bank and banking, securities and foreign exchange regulators have vowed to work hand in hand to expose illegal cryptocurrency activity.

China has always placed stricter rules on cryptocurrencies but the new rule has made all crypto-related activities illegal. According to the People’s Bank of China (PBOC), it is illegal to cryptocurrency trading and anyone that does so will be severely punished; this includes those within China that are working for overseas platforms. To fully phase out the cryptocurrency mining sector, the National Development and Reform Council (NDRC) said that it would launch a nationwide crackdown on cryptocurrency.

Over the years, China does not recognize cryptocurrency as a legal tender. In 2013, the Chinese government referred to Bitcoin as a virtual commodity that individuals are allowed to freely participate in. This freedom, however, precludes banks and payment companies from providing services that are Bitcoin related.

In 2017, Initial Coin Offering (ICO) was banned. The ban was also extended to the conversion of legal tenders to cryptocurrencies by trading platforms which led most of the platforms to shut down operations in China. The crackdown led 88 trading platforms and 85 ICO platforms to withdraw from the market as of July 2018.

To China, the crackdown on cryptocurrency is necessary as the country is trying to launch its official digital currency and the need to fulfil its 2060 climate targets. The crackdown was necessary as cryptocurrency was seen as infringing on people’s properties and ‘disrupting the normal economic order.’

The statement by PBOC on Friday was unequivocal as the current crackdown is distinct from the previous ones. In his statement on Friday, PBOC called Bitcoin, Ether and Tether ‘legally irreparable’ and should not be used. The new regulations forbid financial institutions, marketing and IT providers from supporting crypto-related activities. The activities of both crypto holders and miners are now considered illegal. This is what Henri Arslanian, a PwC crypto leader termed as “No ambiguity. No room for discussion. No grey areas” in his tweet.  

What does this mean for crypto holders worldwide?

The major effect of China’s crackdown on cryptocurrency is the increase in price volatility. While volatility is a common phenomenon in the crypto world, a crackdown initiated by the world biggest cryptocurrency mining country will have a huge effect on market price.    

After the PBOC interview, Bitcoin fell by 4% within 24 hours and is currently trading at $43,320. Ethereum fell by 6% and it is currently trading at $3,036. With the Evergrande debt crisis and the huge blow bedevilling the crypto market, a clampdown by China would most likely keep the market price on the red until another good news crops up.

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Crypto Assets

Crypto prices drop as global market fear increases

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Top cryptocurrency prices have fallen amidst a drop in stocks and fears over China’s Evergrande debt crisis. In the last 24hour, Bitcoin dropped from $47,772 to $42,630 shedding about 8.58%. this is the lowest in price since another bull run began on Sept 5 after the April crash.

El- Salvador’s President, Nayib Bukele sees the fall as an opportunity to invest more. Recall that the country adopted Bitcoin as a legal tender on September 7. Despite the adoption, the price of Bitcoin has fallen by almost 14% since then.

Other coins have experienced dramatic crashes within the last 24hours. Solana, a coin that has experienced 355% growth within the last 3 months fell from $162 to $130 shedding about 11.39% within the last 24hours. Solana’s fall may be categorized by the 17-hour outage which the founder, Anatoly Yakovenko said was caused by bots “flooding the networks”

Ethereum fell by 9.37% while Dogecoin and Axie Infinity fell by 11.22% and 14.14% respectively within the last 24hrs hours. While crypto experiences dark Monday, El-Salvador keeps investing more money in Bitcoin.

A look at the global market

The global market is experiencing fear due to the Evergrande debt crisis. A report published by the University of Michigan shows that consumer’s sentiment is beginning to decline. This trend alone may impact the crypto market as well.

On the other hand, the global market downturn must have been spurred by the Evergrande debt crisis. The company grew to be one of China’s biggest companies by borrowing more than $300bn. Last year, Beijing made rules to control the debt owed by big real estate developers. This led Evergrande to offer its properties at major discounts to raise more money to keep the business afloat. Right now, the company is struggling to meet the interest on payment of debts.

Why would it matter if Evergrande fails?

The collapse of the multi-million dollars company would affect the global market; including the crypto market. Many people bought properties from Evergrande and they expect to make gains. If Evergrande falls, crypto investors will be forced to withdraw more money to keep their business running without the means to invest more. When one business fails, the other gets affected indirectly. This also applies to other firms that do businesses with Evergrande.

The potential impact on China’s financial system is another effect of Evergrande’s fall. In his statement to BBC, Mattie Berkink, the Economist Intelligence Unit (EIU), said that “the financial fallout would be far-reaching. Evergrande reportedly owes money to around 171 domestic banks 121 other financial firms” if the company fails, other lenders or businesses may be forced to lend less. Thereby leading to a credit crunch- a situation where companies struggle to borrow money.

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