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The latest frenzy around the Yield Farming DeFi protocol on Ethereum has got more investors lured to the Ethereum blockchain. Investors are hopeful that with the DeFi craze, ETH price will surge northward.
The surge in the DeFi activity on the Ethereum blockchain network has provided a strong fuel for ETH price rise. Over the last month, ETH’s price has gained over 15% as investors rush to grab the world’s second-largest cryptocurrency. Deribit, a very popular and the largest crypto exchange, has seen a record surge in the open positions for its Ethereum (ETH) Options contract. On Tuesday, September 1, the ETH options open interest surged to a record high of $507 million on Deribit. As per the data from Skew, it surpassed its own previous record of $438 million last month on August 20.
The options open interest shows the amount worth contracts traded but yet to be liquidated. The open positions for Ether options have nearly doubled since the end of July. In just the last five days, the open positions have jumped from $349 million to $507 million. Speaking to CoinDesk, Luuk Strijers, CTO of Deribit, said:
“The key driver for the phenomenal growth has been the recent DeFi success. Many clients have been farming yield using stablecoins, which are bought by selling ether and buying ether call options (bullish bets) to keep the upside potential in the second-largest cryptocurrency”.
As per CoinDesk, the latest frenzy around Yield Farming has fueled the interest in Ether options. It means that investors are possibly anticipating a strong price rally for ETH in the near term.
DeFi Boom Helps Ethereum Eat Into Bitcoin’s Market Share
Ethereum is slowly eating into the market share of the world’s largest cryptocurrency Bitcoin. Well, all thanks to the boom in Decentralized Finance (DeFi). As per crypto analytics company Messari, over $500 million worth of BTC has been tokenized on the Ethereum blockchain for DeFi protocols.
Besides, stablecoins have been migrating to Ethereum in huge numbers. $500 million is very little when compared to BTC’s $216 billion market cap. However, the shift between the two biggest blockchains is still considerable.
$500M worth of #Bitcoin has been ported over to Ethereum in 2020
With only 0.3% of all bitcoin on Ethereum and DeFi booming, the opportunity for decentralized bridges between the two chains is hard to ignore. $KEEP $REN pic.twitter.com/tLGWlaIuFZ
— Messari (@MessariCrypto) September 1, 2020
The total value locked in DeFi projects has recently jumped to over $9.02 billion. The DeFi market cap is currently standing at $17.8 billion with Chainlink (LINK) leading the show. A majority of the surge has been supported by the growing popularity of Yield Farming DeFi tokens.
However, Ethereum co-founder Vitalik Buterin recently warned investors about the craze around Yield Farming. The high-interest rewarding DeFi protocol has attracted several investors towards it.
Seriously, the sheer volume of coins that needs to be printed nonstop to pay liquidity providers in these 50-100%/year yield farming regimes makes major national central banks look like they’re all run by Ron Paul.
— vitalik.eth (@VitalikButerin) August 31, 2020
On the other hand, crypto exchange Binance is also gearing up for its presence in the DeFi market. On Tuesday, September 1, Binance launched its own Smart Contracts Chain for DeFi.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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