- Use cases and adoption created on Ethereum’s DeFi will drive their value and yield more profit to investors than Bitcoin.
- Trader predicts that BTC will continue to absorb gold market capitalization until it exceeds it.
With a steady increase in its Total Value Locked (TVL) since the beginning of the year, Ethereum’s DeFi protocols continue to attract the attention of new investors. Despite the recent drop in the main cryptocurrencies, DeFi sector’s TVL is at a all-time high of $22.66 billion according to DeFi Pulse with no sign of a slowdown in the short term.
In a new video for his YouTube channel, trader Luke Martin has been highly bullish about the performance of some of the major protocols in the Ethereum DeFi. Martin believes that Bitcoin will soon be surpassed in terms of performance and profit by these protocols for 3 reasons: adoption, building use cases, and moving away from centralized alternatives.
Quoting Three Arrows Capital CEO Su Zhu, Martin stated that DeFi tokens “represent real ownership and participation” in a nascent peer-to-peer financial network. Investors are “waking up” to the possibility of decentralized finance displacing the global financial system. Therefore, Martin added:
(…) the masses are starting to get it, not just the early investors, but there’s an entire repricing happening where even the slower-moving crypto investors are starting to realize some of the old projects they supported that are maybe trying to challenge Bitcoin or some of the old platforms they supported that have grand visions but have never actually built anything, that money is going to flow somewhere.
Those investors who allocated capital to projects that “never actually built anything,” according to Martin, have taken note of the technology and use cases that exist in the DeFi sector. In that sense, Coinbase’s former CTO, Balaji Srinivasan, identifies a demand for more private and decentralized systems today and estimates that the tools created on the DeFi sector will have a place in coporate operations as they become more available.
Second, the tech is real. Look at https://t.co/GTIh3M3OHf, https://t.co/EokXN4A3Yx, Zcash, https://t.co/OEfAHLqMlx, https://t.co/7aiHZ3MQbv, NFTs, Uniswap, rollups, and all the new L1 chains just to start. There is genuine computer science here.
— balajis.com (@balajis) January 16, 2021
Ethereum DeFi protocols with profit potential
Among the main protocols that Martin expects that will have the best performance in 2021 are: Yearn Finance, Synthetix, Aave, Uniswap, SushiSwap, Maker, Compound, THORChain, Balancer, Curve Finance, Wrapper NXM, REN, Chainlink and Band Protocol.
As the image below shows, the performance of these protocols is among the best of the last 30 days. Synthetix (SNX) and Maker (MKR) show gains of 214.2% and 188.3%. In comparison, Bitcoin and Ethereum have had a 52% and 82% increase respectively in the same period.
Finally, Martin stated that the use case of the referred protocols will be greater than those created by their centralized counterparts. The trader predicted that descentralized finance will be what Bitcoin is to gold, a replacement. Martin concluded:
Think about it like Bitcoin versus gold. Which do you think is going to have a higher market cap in 100 years? I think Bitcoin is going to continue to chew into gold’s market cap in the exact same way that DeFi (projects) are going to continue to eat into their centralized counterparts.