DeFi Metrics
Since DeFi’s summer ‘20 peak, the general crypto narrative has indisputably shifted away from DeFi, to Web 3.0 and gaming. Granted, the next billion users to crypto are more likely to onboard through gaming than the 69th fork of Uniswap. Yet, many still rely on core DeFi principles to innovate continuously. NFT projects are incorporating airdrops and collateralization of NFT assets, while Web 3.0 / gaming startups are faced with designing sustainable tokenomics, a tall task even for blue chip DeFi incumbents.
However, much of the price action is still driven by narratives and fleeting incentives. Metrics made popular during DeFi’s heyday, such as Market Cap / TVL, may even appear counterintuitive, as liquidity retained does not necessarily translate to higher market capitalization. From a fundamentalist’s perspective, ‘anything that has yield’ constitutes DeFi, as yield is used to incentivize liquidity, which can be re-directed or used to stimulate protocol activity. Trudging through these bear markets, the quality of yields will become more pertinent than during the bull. Highly inflationary protocols that find weak product-market fit with non-sticky liquidity will falter to make way for more sustainable designs.
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FIGURE: A TEAM OF PEPES CONCOCTING THE PERFECT TOKENOMICS Tokenomics (a portmanteau for token and economics) represents the monetary policy of tokens that directly contributes to their price fluctuations. In bull markets, tokenomics were given utmost priority, sometimes constituting full theses for investment decisions. When the euphoria wears off in the bear, however, founders and market participants are left realizing that tokenomics can delay a weak project’s demise, but cannot...
FIGURE: PEPE CROSSING BRIDGES TO EXPLORE ALTERNATE LAYER 1S / LAYER 2S Although ETH remains the dominant Layer 1 for most on-chain activity, alternate Layer 1s have demonstrated product-market fit throughout the bull market run of ‘20/’21. Solana (SOL -2.67% ) emerged as the ‘high-throughput chain’ focused on complex DeFi / gaming, BNB Chain (BNB) offers easy fiat on/off-ramps through Binance CEX, while Avalanche (AVAX) and Cosmos (ATOM 6.70% ) are building application-specific blockchains...
