DeFi - Fast and Furious

Hosted by Jonny Fry and Pierre Bourque, Novum Insights CEO Toby Lewis and Growth Strategist Amber Case were invited to talk about the fast growing DeFi markets on Blockchain Radio.

We summarise the key discussions points from the panel:

• The appeal of DeFi

• The next steps of DeFi

• How to work out the good ones and the bad ones in the DeFi space

• Where Toby and Amber find value in the NFT space

The full radio show is available here.

The DeFi space used to be an mysterious side hustle of crypto and the word DeFi was no m ore than a poorly understood term. Not anymore. It has become a tens of billions of dollar industry and the market capitalization today stands at $91 billion. The figure below shows the growth of the DeFi market in 2020 alone.

Growth of DeFi market cap

What’s the appeal of DeFi?

“It's got a lot of the characteristics that make crypto unique, and I think it's in some of the key building blocks. The lack of intermediaries is one of the great things about cryptocurrencies generally. DeFi takes that to its logical extreme, where everything is effectively powered by smart contracts.” - Toby Lewis, CEO of Novum Insights

Where’s DeFi headed next?

“Not only do I think DeFi will influence the next generation of the web, by encouraging the inclusion of web wallets right into the browser, but that simple sounding thing will alter how we work with our own identity and data. This is going to be huge. Not only will people be able to become their own banks, but all of their details can be stored in that wallet, making transactions more seamless. There's the idea of new protocols like Interledger and Filecoin that can allow the splitting up of files and super small payments and streaming payments. All of the things that you would see in the fiat world are going to happen in DeFi in this highly experimental manner. So it's super energizing for me just watching all the new different tokens come out and what they're doing and seeing the intersection of computer science and finance and global payments and interoperability.” - Amber Case, Growth Strategist @ Novum Insight

Assessing the good and the bad in DeFi

The real challenge in DeFi lies in working out the good ones and the bad ones. Here, Toby Lewis explains how his company built a tool Momentum Pairs that helps investors navigate the dizzying DeFi gains.

Momentum Pairs is a Uniswap liquidity pair tracker. It looks at what’s been trending over a 7, 30 and 90 day process. Novum has been able to use this for building an intelligent portfolio of outliers that are not not correlated to the rest of the market.

also has articles featured in City A.M to help you better understand how liquidity provision works.

Calculating the good, bad and boring in DeFi

Technically speaking: a data analysis of Uniswap

Why do we need a pair, why can’t I just put my ETH or BTC straight?

Toby Lewis explains the difference between HODL and liquidity provision.

“You focus much more on pairs than you do on specific tokens. What's really interesting about DeFi is you can put those pairs into a liquidity pool. So using a smart contract, you can effectively help make the market and become a market maker. You're able to lock in and effectively earn a fee for helping provide the market. So for free, for instance, the wrapped Ethereum and the wrapped Bitcoin pair provide you a higher return by about 20% over the last eight months, than just holding Ethereum and Bitcoin. So you get alpha from the mere use of a smart contract and decide to make the market because you get a fee for helping provide the transactions and get rebalanced. One of the great things about DeFi is effectively it allows you or me to become like Citadel or another major market maker in traditional financial markets and essentially get the returns for market making.”

The hottest topic on the block, NFTs

Jack Dorsey’s first ever tweet has been sold for $2.9 million as an NFT, and digital artist Beeple’s work has been sold for $69 million at Christie’s. NFTs have become a cultural trend. Toby Lewis added “I think it's once crypto begins to start touching the real world and you can move real world objects around. I think things are going get really, really interesting.”

If you want to learn more about NFTs, check out our blog post NFTs are on Fire 🔥.

Want more insights?

Try our latest product, Momentum Pairs where you can look for the newest and most exciting emerging tokens launching on Uniswap.

Find out more about digital assets or check the returns for yourself with our free DeFi Calculator.

Novum Insights is your guide to the Defi, Crypto and Fintech Economy.