The new generation of Decentralized Finance (DeFi) is now being introduced to the market as the old generation tokens are falling in value. While some popular DeFi tokens are on their bearish move, some set of new DeFi projects have been entering into the market and are becoming the center of attention to investors amid fierce yield farming projects, large airdrops, and advanced technicalities. This appears to be a set of entirely different programs propping up from the technical and fundamental aspects of the market. This new development made a crypto enthusiast, Mewny, refer to the newly launched tokens as DeFi 2nd Generation.
Generation 1 and Generation 2 of DeFi Have Emerged
The analyst, in a tweet, expressed her shock and tweeted that it seems that we’ve now had a Generation 1 and Generation 2 of DeFi. While Generation 1 is now static, Generation 2 keeps moving higher. This development is not at all psychological but fundamental. The crypto analyst, in a chart with reporters, noted that people are now more attracted to the 2nd generation tokens because of their well-organized communities and smart token delivery models, hence the reason for the bullish momentum spurred by psychology and not fundamentals.
She added that at the moment, what the DeFi community craves is creativity. Fundamentals will come into play when the market is settled, and utility will now be the yardstick used for valuing assets. She said that people get more attracted to programs that have developed a specific and exciting niche for themselves in the marketplace.
Although most investors may deem it fit to take the opportunity to earn from the newly launched profitable tokens, people need to ask about the nature and fundamentals of the project. They also need to know if the rise in their prices will last or cut short.
Any Fundamentals or Mere Pumping of Token Prices?
The 2nd generation of DeFi tokens reminds one of what happened last summer when many DeFi tokens were competing with each other for airdrops, big farming APYs, accompanied by rising prices of tokens. But according to Mewny, a new generation of investors has arisen since then. They are now always searching for technical development instead of shooting stars.
Mewny stated that there are not too many “me too” programs in the DeFi market. For example, some investors might not see heavy liquidity in some projects initially. Meanwhile, the issue is that they’ve overrated the understanding of the market. Hence, they build liquidity mainly from people who didn’t enter the market early. This development has allowed projects that keep growing, irrespective of the market’s direction.
An example of the 2nd generation tokens rising heavily is Inverse Finance which pledged to ensure that the INV gov become tradable. Consequently, the hitherto unnoticed token raindrop of 80 INC has now surged to $100K, making it the most profitable airdrop ever in the DeFi marketplace.
Also, Alchemix is another 2nd generation DeFi token rising rapidly. Alchemix’s program is about an imaginary stable coin, which is aIUsd which issues the token from Yearn Finance vaults, making it repaying the loan itself. This is also an initiative that eGirl sees as marketable. According to her, investing in assets that only pay interest is now archaic in DeFi. An investor must estimate and value future yield to make more money in their DeFi investment.