COMP kicked off the yield farming in June as a new mechanism to attract resources to what is now the sixth largest decentralized finance platform (DeFi) and the first to compete with MakerDAO as an industry leader.
First introduced to Ethereum by Synthetix in July 2019, “liquidity mining” is what inspired this summer's boom. The prospect of giving people a new token above and beyond normal deposit yields quickly pushed the COMP token up more than anyone had anticipated.
On June 21, COMP peaked at $ 372 (find out now quotation in real time). The overwhelming success of the governance token has led other dapps to follow suit, such as with multi-token pool maker Balancer, Non-Fungible Token Market (NFT) Rarible, and others.
But events quickly took another form as only in the crypto sector can happen. A key event happened when the automated market maker (AMM) Uniswap saw its governance token accidentally released early, with the tokens snapped up against all imagination. The ending was dramatic and introduced "vampirism" and a twisted exit scam.
Eventually, Uniswap released its UNI governance token, with its own cash extraction scheme. "Personally, I believe that the issue of UNI is the pinnacle of this farming movement," he told Primitive Ventures' Dovey Wan.
The highlight of the DeFi Estate for Wan was the power of the launch narrative initiated by Yearn.Finance. Yearn had already been a tool for optimizing yields when COMP was first released, but the excitement generated by yield farming has sparked a lot of innovation.
Yearn creator Andre Cronje created the YFI governance token and urged liquidity providers to earn it rather than buy it. "It is obvious to anyone studying this space that DeFi has major structural advantages over CeFi," said Spencer Noon, an investor at DLT Capital, referring to traditional or centralized finance.
"This is because, among other factors, the protocols do not have employees, physical offices or other expenses that traditional financial companies have instead." Even as the DeFi Estate has cooled, the token that started it all held value and the narrative it launched has continued. Synthetix's Kain Warwick isn't put off by DeFi's latest results.
He believes that a real industry has been proven behind it all. “At some point we have to move from the hype to reality. The big difference between this cycle and the previous one is that the reality is here and it is sustainable, ”Warwick concluded.
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