The Hunger To Find the New DeFi Gem

Decentralized Finance or DeFi is the latest craze in the crypto industry. Everybody can see that the rise of DeFi directly influenced the current bull market. Many people can debate each other whether the bull market will last until 2021 or not, but I believe everybody agrees on the fact that DeFi is the latest buzzword that has pulled up the crypto market by itself.

Before we continue, check out this article on everything you need to know about Decentralized Finance applications.

Since Compound Protocol took the DeFi space by storm a few months ago, everybody rushed to create their LP (liquidity providing) token in their own DeFi protocols. Yep, DeFi apps had no native tokens, mostly about simple lending/borrowing actions. But, the addition of the DeFi token had maximized everybody’s interest in it. You can lend and borrow stablecoins in DeFi protocols and get rewarded by their tokens. This speculative aspect has helped the crypto space to reinvent themselves this year.

But of course, they are not very sustainable when there are more players and more dumpers in the market. That’s why people often migrate from one DeFi protocol to another. For example, Compound was the most popular DeFi protocol with over 30% dominance, but now it has been surpassed by Aave, Curve, and yearn.

It’s kind of obvious that these crypto whales are always hungry to find new DeFi gems. They don’t have any specific loyalty or feeling toward one protocol or crypto team. So, how do they find new DeFi gems? Well, nobody 100% knows but here is some guidance in case you want to find a new DeFi protocol before it becomes mainstream.

High APR

APR stands for annual percentage rate. One of the most common features that rising DeFi protocols have is high APR, especially for the DeFi token. For example, MantraDao (as the new DeFi player based on Substrate) promises a 88% APR to everybody who stakes OM token in the next 60 days. It sounds very risky for the team, but they successfully get huge attention from everybody because of this policy.

Even if the DeFi token itself is not very attractive in terms of APR, at least the protocol must provide a competitive interest rate for the stablecoin lenders. Otherwise, it will be hard to keep the traders in one same protocol.

Substrate (Polkadot) or Cosmos-based

People are desperately looking for new DeFi protocols that utilize more modern blockchain ecosystems. They know Ethereum is still the most popular, and they are still familiar with the concept of Ethereum, but they also want to find something new that is not plagued by high transaction fees.

Nowadays, DeFi protocols built on Substrate (the same open-source framework that created Polkadot) or Cosmos usually get a lot of attention. Band protocol or MantraDAO is the living proof of this. Akropolis also became insanely popular recently after all the Polkadot lovers pumped the coin.

If you want to find new DeFi protocols, you may want to search for something built on Cosmos SDK or Substrate.

Good Tokenomics

Here’s also one of the most important things to consider. Good tokenomics. Whales understand the risk of investing their time and resource in DeFi protocols to profit from the DeFi tokens. Good tokenomics help them invest in your product, while bad tokenomics would make it hard for them to be interested.

Especially if the DeFi provides opportunities to private and public sale participants, the vesting period becomes extremely crucial in everybody’s speculation strategies. A DeFi protocol with a reasonable inflation rate and tokenomics would pump much higher than the one that doesn’t have good tokenomics.

Keep in mind that nothing is set in stone when it comes to finding a new DeFi gem. However, all the three factors I mentioned above would be able to help you understand how whales find new DeFi gem before they become mainstream.

Check out this article that gives detailed information on how DeFi is transforming B2C financial services.