Decentralized finance (DeFi) has exploded in 2020, but interest in space retail remains quite low when measured by Google's search queries. These data suggest that it may still be too early to draw parallels between DeFi growth and the initial coin offering (ICO) bubble that exploded between the last few months of 2017 and early 2018.
A curious comparison
Google Trends searches for the word "DeFi" currently indicate that the retail public is as interested in open source finance as they were in ICOs during the historic boom. The DeFi movement seeks to transform old financial products into reliable and transparent protocols by leveraging decentralized networks.
Google Trends provides access to a mostly unfiltered sample of actual search requests made on Google. Some investors have begun to compare the DeFi explosion with the ICO bubble which left millions of investors holding worthless alternative cryptocurrencies.
An initial coin offering is the equivalent in the crypto market of an initial public offering of shares in the traditional market. Why the comparison? According to data source defipulse.com, total blocked value in decentralized finance applications has increased by a staggering 1.300% to exceed $ 9 billion this year.
This number is 66% higher than the $ 5,4 billion raised through ICOs in 2017 and nearly double the $ 4,6 billion raised by ICOs in the first quarter of 2018, just before the crash known as "crypto winter" .
Trading volumes on major decentralized exchanges are now challenging centralized exchanges. Some of the DeFi-associated tokens like Aave's LEND have risen more than 3.000% this year, leaving bitcoin far behind. The best cryptocurrency by market value is currently up 43% year-on-year. Discover here the quotations in real time.
Fewer investors but more sophisticated
One interpretation of why DeFi isn't getting the same attention to detail as the ICO is that its growth is fueled by fewer but more sophisticated investors than those involved with ICOs.
In other words, Defi is nowhere near the level of the ICO hype bubble, as noted by cryptocurrency derivatives trader Cantering Clark. The bubbles are usually the result of the movements of a euphoric mass that runs faster and faster.
"DeFi is an incrementally augmenting and sustainable trend while ICOs were not," according to Su Zhu, co-founder and CEO of Singapore-based fund management firm Three Arrows Capital.
Actual experience in the field of DeFi can also be a factor. Denis Vinokourov, head of research at London-based prime broker Bequant, says companies that trade on centralized exchanges don't take decentralized exchanges seriously. However, companies trading on both fronts have realized the long-term growth potential of decentralized exchanges.
