As altcoin season presses on, it is beginning to look a lot like 2017 again.
Of course, things are much different now: the ‘wild west’ days of crypto are (almost) certifiably over. Nowadays, there are more regulations, better community standards, and an investing public that is much savvier and less willing to throw money at projects that have simply tacked ‘blockchain’ onto the end of their names.
The Most Diverse Audience to Date at FMLS 2020 – Where Finance Meets Innovation
Still, though, the kinds of gains that have taken place in the prices of a number of altcoins over the past several weeks and months have not been seen on such a widespread scale, since the golden days of nearly three years ago.
For weeks, much of the token price hype seemed to be centered around LINK, the native asset of the Chainlink cross-chain oracle network.
More recently, however, the public eye seems to have turned to another cross-chain oracle network token: BAND, from the aptly named Band Protocol.
BAND’s Market Cap Has Increased More Than 7000% So Far This Year
Indeed, the BAND token price sat quietly between roughly $0.20 and $1.20 from September of 2019 until July of 2020, when things really started to take off: by July 31st, BAND was worth roughly $3.99. On August 10th, the price peaked around $15.70; though at press time, it had fallen to $13.70.
Though even with the recent correction, BAND’s returns are significant: since the beginning of the year, BAND rose from $0.22 to $13.43, an increase of over 6100%. BAND’s increase from the month of July until now, from $1.10 to $13.71, represents an increase of over 1100%.
Additionally, BAND’s relative price growth so far this year even surpassed LINK’s, which has seen a 659.551% increase since January 1st.
The market cap of both of these projects has risen significantly since the beginning of this year, albeit on quite a different scale.
Chainlink’s $623 million market cap at the beginning of the year grew to $4.7 billion at press time, an increase of over 7,400%; the Band Protocol’s market cap started off the year at $3.5 million, and had grown to $275 million, an increase of approximately 7760%, by press time.
In other words, the Band Protocol’s market cap is only a fraction of the size of its competitor’s; however, relatively speaking, the project seems to be growing at a faster rate than Chainlink.
Despite the momentum, $BAND remains priced significantly lower than $LINK.
This large valuation gap can in part be explained by the fact that Chainlink is fully operational with a significant future integration pipeline.
But is BAND undervalued, overvalued, or fairly priced? pic.twitter.com/ZTKuRfCNGY
— Messari (@MessariCrypto) August 10, 2020
The increased focus on blockchain oracles could be a run-off effect from the expansion of the DeFi ecosystem as a whole.
After all, 2020 has been a big year for DeFi: a number of new products, platforms, and concepts are either already live or are being developed on decentralized networks like Ethereum. These include stablecoins, yield farming, ‘synthetic’ bitcoin (WBTC), decentralized exchange (DEX) platforms, and more.
However, in order for any of these platforms to function correctly, they need to fetch market data from various websites and blockchain networks. This is why oracles like the Band Protocol and Chainlink are so important: smart contracts use them to obtain the data necessary to run DeFi platforms.
Therefore, as the DeFi sector continues to expand, blockchain oracles play an increasingly important role.
And there is plenty of evidence to suggest that DeFi is growing: in addition to the new products and platforms, the amount of capital that is ‘locked’ in the DeFi ecosystem as a whole has grown exponentially since the beginning of this year.
Specifically, data from DeFi Pulse shows that on January 1st, 2020, the amount of money in DeFi platforms was $680 million. Today, that figure has increased to $4.61 billion.
Do you think that the DeFi ecosystem is poised to continue its growth? Will tokens like BAND and LINK continue to grow alongside it? Let us know in the comments below.