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Remember when Long Island Ice Tea Corp. rocketed its shares by reinventing itself as a cryptocurrency company before it crashed and burned? Well, it’s happening again in the digital asset sphere, but instead of adding “blockchain” to a name, DeFi is the preferred moniker.
DeFi, or decentralized finance, has become part of more and more corporate promotions this year. Nucleus Vision, a data-sourcing project started in 2014 to provide consumer information to retailers, recently announced that it is “DeFi for Retail Purchase Loans”. Tao Network, which has been in existence since 2015, now claims it is “building the DeFi of entertainment.” Tron, which has been operating for at least three years, has just issued its own DeFi coin.
In many cases, rebranding efforts are causing a rise in token prices that hasn’t been seen since the peak of the Bitcoin bubble in late 2017. The market value of Tron’s TRX coin, which is tied to a new DeFi token called Sun Genesis Mining jumped from $ 800 million in the three days following the announcement of the new coin.
DeFi was the hottest thing in cryptocurrency last year. DeFi apps are supposed to allow people to lend, borrow, trade and take out insurance directly from each other, without the use of intermediaries such as banks. This has also led to multiple get-rich-quick schemes such as yield farming that often promise triple-digit returns.
“The rebranding of cryptocurrencies has been going on since cryptocurrency has existed, and since DeFi has been hot for about the past 18 months, many cryptocurrencies have emphasized their DeFi aspects,” said Aaron Brown, a cryptocurrency investor who writes for Bloomberg Opinion. “It’s not difficult, since DeFi isn’t always strictly defined, and most cryptocurrencies are decentralized and most have some financial aspect, so it’s not hard to change the brand.”
😃 I just gave a talk and shared the progress of #AS SOON AS to # 2020CHAINSIGHTS hosted by @ChainDDGlobal.#TRON #DeFi the ecosystem is exploding in a new way, #SUN 🌞 Genesis Mining is still ongoing. We welcome all developers and users who join us$ JST #JustSwap #TRX $ TRX #BTT pic.twitter.com/SiL4G7x4Ba
– Justin Sun🌞 (@justinsuntron) 5 September 2020
Technically, DeFi apps – whose financial functions are supposed to be managed entirely by software – shouldn’t have any central admin or authority, but that’s often not the case even with newer projects. Developers often retain some measure of control, in case a bug in an app’s code makes it unusable or vulnerable to hackers.
“It dilutes the phenomenon a bit, which explains why we’ve seen increased efforts to define the concept, rebranding to open up finance and highlight the pain points of centralization,” said Nic Carter, co-founder of researcher Coin Metrics. “All of these are attempts to maintain the purity of the movement.”
In September, Justin Sun, who founded Tron, launched the Sun Genesis Mining meme coin “to promote the vigorous development and possibilities of TRON’s DeFi self-governing community,” he said in a blog. The coin debuted with a market cap of nearly $ 38 million and also raised the price of TRX as users have to make TRX deposits to get the new coin. Twenty DeFi projects currently use Tron’s technology, according to ranker DappRadar, while several hundred use Ethereum.
EOS, another open source protocol, recently claimed it “will unleash DeFi”. EOS supports 11 DeFi projects, according to DappRadar.
Many projects are adding new features, in addition to rebranding. On August 3, Project Nucleus Vision announced Nucleus Vision 2.0 that it “will aggregate existing DeFi lending protocols, partner with liquidity providers, and partner with global retailers and brands to enable cryptocurrency users to leverage their assets to purchase real-world products. “.
The firm’s currency, whose market capitalization peaked at around $ 200 million in 2018, briefly jumped from $ 3 million to $ 8.3 million on the announcement, before slipping down again, according to the crypto data tracker CoinMarketCap.com.
TRON has been investing in the DeFi ecosystem for years and has now become one of the most popular blockchains supporting DeFi, a spokesperson said. EOS declined to comment, while Nucleus and Tao did not respond to requests for comment.
“In a way they pivoted rhetorically on DeFi rather than anything that changes structurally,” Carter said. “There is nothing illegitimate about it, but some perceive it as an attempt to exploit the hype surrounding DeFi.”
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