The popularity of yield farming is on the rise – but institutional investors have not yet taken full advantage of it. The decentralized finance landscape (DeFi) exploded independently of Bitcoin (BTC) last year – and the so-called DeFi summer of 2020, sparked by emerging staking options, could see its continuation this year.

Despite the recent price correction, yield farming coins (judging by the recent jumps) are on the rise. The liquidity mining hype could further fuel user interest this year.

Yield farming coins are becoming more and more interesting

The emergence of a large number of new DeFi projects and the rise in the popularity of the sector has been accompanied by abundant investment support, because the market capitalization of the sector is currently 73,94 billion dollars.

DeFi continues to grow, while the prices of all DeFi yield farming coins are rising. As a result, the market capitalization of the sector has increased by 23.65% in seven days. It is now almost $ 15 billion.

Providing liquidity through cryptocurrencies to decentralized protocols – which in turn reward users willing to bring capital to their platforms (aka yield farming) – is becoming more and more interesting to many users.

Take, for example, Synthetix (SNX), a crypto-powered platform that enables the creation of synthetic assets (synths) on the blockchain that replicate the value of real-world assets: SNX has increased by 28.75% in the last 24 hours, while its value has increased by 62.88% in the last week.

Aave (AAVE) is another DeFi lending protocol, which increased by 23.82% and 34.17% over the same period, while its competitor, the lending and borrowing platform Compound (COMP), increased by 20.5% and 59.59%, respectively.

The token of the decentralized exchange (DEX) SushiSwap (SUSHI), on the other hand, grew by 24.11% and 13.18%, respectively.

Institutional investors

During a Blockworks webinar, Aave recently confirmed plans to launch Aave Pro. This is to operate segregated, approved pools of “whitelist” users who have passed KYC (Know Your Customer) protocols. This removes one of the most important barriers to entry for regulated institutions wishing to enter DeFi.

The competing lending platform Compound has also announced a treasury product for companies and institutions. This should enable large customers to achieve a substantial fixed return, which is far more attractive than the returns in the traditional financial world.

With yield farming protocols providing an attractive alternative to the low traditional bank rates, institutional investors will inevitably be drawn to DeFi.

And because financial regulators have already shown a particular fondness for this high-profile game, it is to be expected that they will go hunting for appropriate funds with the traditional banks.

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Text credit: Cryptoslate

Last updated on July 7, 2021

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