1inch puts the industry in a festive mood


Dapp Digest | Week #53 | by Ilya Abugov

The last week of 2020 proved to be a big one for the crypto industry. BTC eclipsed $29K, while Ethereum broke $750 in a week full of excitement and updates.

Crypto Twitter was going into a frenzy trying to guess how high BTC will go before the end of the year, and which exchanges are going to delist XRP next. On top of that, the dapp space continued to provide a steady stream of updates, and up and coming projects to watch.

The exchange aggregator 1INCH dropped some tokens to its early adopters, in a distribution reminiscent of the one conducted by Uniswap. The governance token gives users the ability to vote on protocol parameters.

Source: 1Inch Medium

1inch has become a major player as a DEX aggregator, and the launch of the token has put it in the conversation for being the top decentralized trading platform.

Looking over the year, it is clear that governance tokens have played a major role in catalyzing the industry. Lack of liquidity was one of the major hurdles the space was trying to overcome, and as was shown in DappRadar’s DeFi Year in Review report, the industry made great strides towards it.

It is also important to note the aggregation trend, as building on top, and combining utility of multiple protocols has become extremely important throughout the year. It both simplified the user experience and expanded functionality.

It will be important to lower the learning/entry barrier for new users, in order for the industry to continue growing. Aggregators may prove to be very valuable in that regard.

Don’t forget the sushi

It is hard to imagine talking about 2020 without mentioning SushiSwap. The protocol that went head-to-head with Uniswap announced the launch of its new liquidity mining program, Onsen, last Thursday.

SushiSwap seems to have been in the middle of a number of important occurrences this year including meme tokens, “liquidity vamping”, and merges. Given its expanding functionality through the expected arrival of BentoBox and the merger with Yearn, it will be interesting to see what 2021 will bring for the upstart project.

Exploits continue to trouble the industry

Protocol exploits became a recurring theme in DeFi throughout most of the second half of the year. While at first this may have been seen as an issue stemming from the lack of audits by many protocols rushing to launch, later a number of audited protocols came under attack.

Most recently, the Cover Protocol was exploited because of an “infinite minting bug”. While the hacker, apparently, returned the funds, the event is still troubling, especially given the fact that the protocol is a player in the insurance space.

Insurance has become an important topic, as users and protocols look to protect themselves against the threat of attacks. Nexus Mutual and yInsure became arguably the biggest brands in the DeFi insurance segment, with the yInsure’s NFTs revealing the possibilities for NFTs beyond arts, collectibles, and games.

Still, the issue of exploits hangs over the industry. With liquidity growing and composability enabling greater integration between projects, the possibility of a hack causing a domino effect becomes a scary prospect.

The industry will need to do a better job of identifying and managing risk, in order to support healthy growth going forward.

Who doesn’t like options?

The last quarter of the year showed the DeFi stack expanding, and decentralized options were at the front of that. With DeFi trading volume growing, hedging in the DeFi became a relevant subject.

Recently Opyn, one of the oldest protocols working with decentralized options, launched a Opyn v2 which introduced the “Gamma Protocol” among other updates. However, the project is now part of a crowded field. Primitive Protocol launched its v1, while the Hegic ecosystem saw the competition of the Whiteheart token sale.

Source: Twitter

The options segment of the DeFi market is becoming very competitive, even while adoption is limited. This may benefit end-users, as protocols will try to innovate in order to win them over.

The arrival of DeFi options may also catalyze the asset management side of the sector, as these financial instruments should enable a greater range of strategies to be implemented.

Another splash in the arts and collectibles sector

Arts and collectibles have been trying to come out from under the shadow of DeFi for most of the second half of the year. The recent sale of Cryptopunk COZOM for over $62K, is just one of the examples of the attention-grabbing numbers the sector has been posting over the past few months.

As the value of these assets has grown, projects like NTFfi and NFTX have appeared to try to incorporate collectibles into the DeFi sector.

Digital art has also been enjoying growth through NFTs. The top 10 artists in the space now have total sales that amount to millions of dollars.

Source: Cryptoart.io

Moreover, the marketplaces are starting to mature. Throughout the year, gas costs have been a major issue for the Ethereum ecosystem, and now OpenSea has come out with an update that at least partially addresses it. The Collection Manager introduces a feature that Dragos Dunica, Co-founder of DappRadar, has called “Mint-on-Demand”. With it, creators of NFTs don’t need to pay gas fees until the first transfer or sale of their item.

Source: DappRadar.com

With art and collectibles grabbing more and more headlines the marketplaces on which they are being traded should receive more attention as well. The space should become more competitive, which may bring new and exciting features to the end-users.

2020 was a challenging year, but it was also a year full of growth and opportunities, and now as it is winding down, I wish you a happy 2021. Stay healthy and stay tuned to DappRadar’s weekly Dapp Digest.

The information provided here is for informational purposes only. This is not investment advice and should not be treated as such. Strategic Round Capital and/or the author of this article holds a position in BTC, ETH, HEGIC, WHITE, YFI.

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