The Coronavirus pandemic has left the world economy struggling in many aspects. Entire supply chains have been halted and it is expected that the extended lockdowns will have more effects on the economy than the 2008 financial crisis and mirror the 1929-33 Great Depression that resulted in mass hunger and employment especially in the West. However, despite the bleak economic situation, some sectors are performing better than others and are going strong. They include e-commerce platforms, pharmacological companies because of increased demand and now it is being seen that Decentralized finance (DeFi) and decentralized technology companies are performing extremely well in the current scenario as well.
DeFi Breaking Previous Records
The number of users on the DeFi platforms including MakerDAO and dYdX has surpassed previous records especially in the month of March with 1458 and 586 users respectively. Other notable apps including Synthetix and Compound have also shown record statistics during the month. Meanwhile cryptocurrency trading and interest in the sector is growing at a steady rate and posted a sizeable growth in the month of March as well. There was some downside to these record numbers as the March 12 selloff resulted in increased selling pressure on the MakerDAO stablecoin and resulted in it being unpegged from the USD for a while causing Fear and Uncertainty (FUD) within the market. While the MakerDAO suffered, other platforms like Synthetic benefitted from it and gained new users thus increasing their market share. MakerDAO’s decision to halt interest percentage for the future may also have affected the position of the platform as the top DeFi destination. However, competition is good for the sector and now, more and more companies vying for the top spot in the DeFi world.
While forex and stock market trading has increased around the world in many instances due to more and more people looking to work from home and earn through online trading, cryptocurrency trading has posted sustained statistics despite the deep bear market sentiment for almost half of March. This bear market was much bigger than the one on the traditional stock markets where a loss of around 30% was reported. Bitcoin’s bear move resulted at one point upto 60% decrease in price index. Despite the price drop, cryptocurrencies recovered and are still doing considerably well and the price drop has been compensated for many assets as well.
This is surprising for many crypto and blockchain skeptics around the world. It is because many believed that the market tank after the January 2018 would leave the DeFi business in the ruins because much of it was just speculation and there was no real use case or adoption around the world. But, this was proven wrong especially during the current economic condition that is seeing more and more users enter the DeFi sector and present real use cases for the future.
The very nature of the Coronavirus pandemic is causing the tech world to force disruption and use new technologies. The virus itself is not in control of the governments and they are continuously blaming each other for the unchecked spread across the borders. This calls for a consensus-based decentralized approach to help keep track of the spread and plan its response. Decentralized technologies and DeFi have a natural role to make these crucial steps more effective, transparent and accessible. From payments, goods distribution, de-manipulated spread of disease-related information and holding authorities responsible, it is a step in the right direction.
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