DeFi Update — a weekly snapshot of the decentralized finance market.
- Non-fungible tokens (NFTs) are taking the art world by storm.
- Bank of America is bullish on DeFi.
- Stacks (STX) reaches all time high.
DeFi metrics of the week
NFTs keep breaking records
This week has been dominated by the boom of so-called NFTs. NFTs are non fungible-tokens: unique, non-interchangeable, digital items on a blockchain. Also known as crypto collectibles, they are used to represent a digital file, say of a song or image. The digital file itself may be infinitely reproducible, but the NFT is unique and is often taken to represent an ownership claim over the digital file. Thus anyone can download a song but only one person can own the unique blockchain-based token that represents it.
One of the main use cases for NFTs for now is as claims of ownership over pieces of digital art. Because it’s not quite accurate to say one is the unique owner of an infinitely reproducible item, some analysts prefer to see NFTs as autographs. However one conceives of it, it’s clear that NFTs are having a moment: earlier this month, the second largest sum ever paid for a piece of art by a living artist was paid for an NFT. This week, the buyer was revealed to be a Singapore-based blockchain entrepreneur and investor, who uses the pseudonym “MetaKovan.”
In the record sale, he paid $69 million for an NFT of The first 5000 days, a collage of 5000 digital artworks created by artist Beeple. Symbolic of how legacy institutions are joining the crypto movement, the auction was organized by Christie’s, one of the most prestigious auction houses in the art world.
There are contenders for the role of key NFT marketplace, however. Popular peer-to-peer NFT marketplace OpenSea’s transaction volume has indeed grown more than a 100 times since September. It announced on Thursday, March 18, that it had raised $23 million and aims to become the “Amazon of NFTs.”
Bank of America makes the bullish case for DeFi
On Wednesday, March 17, Bank of America published a report titled “Bitcoin’s Dirty Little Secrets.” While the report is mostly bearish on Bitcoin, it is bullish on decentralized finance (or DeFi) applications, calling the space “potentially more disruptive than Bitcoin.”
The bank argues that the real potential of blockchain for finance lies in DeFi and warns traditional financial institutions against ignoring it:
“DeFi shows the opportunity blockchain offers to finance. We believe that one of the best differences against being disintermediated by DeFi would be mainstream finance grasping these opportunities.”
STX reaches all-time high
STX is the native asset of the Stacks blockchain and is used to power decentralized applications, or DApps, and smart contracts built on top of Bitcoin. To maintain network consensus on Stacks, STX holders temporarily lock STX on the protocol, in a process called Stacking. As a reward for doing so, they earn BTC.
While the asset was only worth $0.40 in the first days of February it has been on a very bullish trajectory since, reaching a new ATH over $1.40 this Saturday — up more than 20% over the last 7 days only.
Learn how to Stack STX on OKCoin and earn up to 25% APY in Bitcoin.