The most important events in the crypto industry in 2020 include the outbreak of DeFi, the launch of Ethereum 2.0, and the breakthrough of Bitcoin’s 20,000 mark.
Original title: “A review of major events in the crypto world in 2020”
Written by: Crypto Briefing
Translation: Fenbushi Capital
No matter how you look back on 2020, this year is a year of great changes for the crypto industry and other industries. The new crown epidemic, the black swan sweeping the world, has caused tremendous damage and subverted the lives of millions of people in all corners of the world. So far, the new crown epidemic has claimed more than 1.5 million lives, not to mention the economic losses caused by the prolonged blockade.
Anti-fragility of cryptocurrency
The short film of George Floyd’s death at the hands of a police officer in Minneapolis spread wildly on social media, which caused a major change in the social and political landscape of the world. The anger from this murder triggered a large-scale protest called “Black Lives Matter” worldwide. Although everyone is affected, some industries have flourished under special circumstances.
Most parts of the world have stagnated due to the epidemic, and the cryptocurrency field has ushered in its largest year of development so far. The crypto market runs 24 hours a day, and Bitcoin prices no longer swing at the bottom. A series of new things such as the explosive growth of DeFi proves that those who have survived the winter of 2018 to 2019 are worth the wait.
Although you have no idea about the future of the cryptocurrency industry, many believers have been excited about the future in the past 12 months. 2020 is a year that will change the world, but cryptocurrencies will remain unchanged. Here are 20 major events that define the crypto industry in 2020.
The end of the bear market?
The price of Bitcoin at the beginning of the year was approximately US$7,195, while Ethereum was only US$129, a 91% drop from the historical high two years ago. In 2018 and 2019, the currency prices of these two major cryptocurrencies did not improve much, which indicates that many people believe that encryption technology has died in the bull market in 2017. But the market started to rebound in early 2020, which makes people full of information about the end of the bear market and the arrival of the bull market. By mid-February, the price of Ether had doubled, and Bitcoin had broken through its key resistance of $10,000. For those who pay close attention, this encryption industry seems to be showing signs of life again.
bZx Lightning Loan Attack
Flash loans allow DeFi users to borrow funds without any collateral as long as they repay the loan in the same transaction. The tool has triggered a lot of discussions this year, including many negative discussions. Since this innovation surfaced, some advanced DeFi users have used flash loans for large-scale arbitrage. This raises a question: in the long run, will these behaviors have a positive or negative impact on the industry. The controversy began in February when bZx encountered two lightning loan attacks (these two attacks have caused nearly $1 million in damages), although numerous similar attacks have occurred since then.
Black thursday
In December 2019, Wuhan, China, included the first COVID-19 patient; but it was not until early 2020 that the rest of the world began to respond to the epidemic. As of March 11, the number of recorded cases worldwide has surged to 118,000, making the disease classified as a pandemic by the World Health Organization. The next day, Donald Trump suspended travel from Europe to the United States.
Then the market reacted to panic and triggered a sell-off of cryptocurrencies. This day was called “Black Thursday.” Bitcoin and Ethereum fell by 50% in one day, and investors scrambled to avoid risks. This crash led to liquidation. Many investors were restricted from adjusting their mortgage bond positions due to peak network congestion. DAI also suffered huge losses due to its decoupling with the exchange rate.
DCEP
In April of this year, Europe and the United States experienced the first round of blockade, and China launched the digital renminbi, kicking off the global digital currency race. It is unclear what the cashless world means for cryptocurrencies such as Bitcoin, but we know that governments in other countries are following China’s steps. Coronavirus has prompted people to turn their attention to digital currencies, and the demand for central bank digital currencies (cbdc) in various countries has become the focus of increasing attention from global leaders this year.
Halved
Block rewards received by Bitcoin miners are halved every four years. What people affectionately call the “halving” has become a topic of controversy, and there are disagreements over whether this event will trigger a new high in cryptocurrency prices. The most recent halving occurred on May 11, and BTC subsequently experienced price increases consistent with historical data. Of course, the price increase of Bitcoin does not exclude other factors.
Compound launches token COMP
DeFi blossomed everywhere in the first half of this year, and Maker Dao began to dominate the market. However, in mid-June, Compound launched the governance token COMP, which really started the upsurge of “liquid mining”, which changed this situation. COMP rose 400% in the first week, reaching an all-time high of $372.
Compound after the token issuance, the total value lock (TVL) in the agreement surpassed MakerDAO. Although Compound’s leading momentum did not last long, it indicates that the DeFi boom has just begun.
YFI Fair Release
When liquidity mining became the focus of DeFi users, Andre Cronje built the aggregator protocol yEarn.Finance, allowing users to “optimize mining output” through various protocols.
Subsequently, yEarn launched a token called YFI in July, and its “fair release” won the favor of the community. Although Cronje built the agreement, he did not get any YFI tokens, which means that he himself and the rest of the community members also need to participate in liquidity mining.
This move was welcomed by many people in the DeFi industry, making YFI soar and reached a peak of $43,678 in September. Since V2 was released, it has released multiple integrated versions. At press time, the value of YFI was approximately US$25020.
Liquidity mining
In midsummer, people’s initial enthusiasm for Compound liquidity mining has completely turned into a fanaticism. Many protocols that use food as a token prototype have sprung up like bamboo shoots after a rain, providing DeFi users with generous mining rewards. One is SushiSwap, a branch of the decentralized exchange Uniswap; the other is Pickle Finance.
Among them, the most notorious “food token” is an unaudited project called YAM. In less than 48 hours of hype, YAM made more than $100 million before a loophole caused an oversupply of YAM tokens. Although the project never fully recovered, the community united and rescued the project by authorizing the supply of governance tokens. Since then, the boom in liquid mining soon ended.
Inflow of institutional funds
2020 is the long-awaited year when institutional funds flow into Bitcoin. One of the key turning points was when legendary investor Paul Tudor Jones declared that he had allocated 1% of his investment portfolio to several leading cryptocurrencies; subsequently, Michael Saylor spent $425 million to buy Bitcoin and included Bitcoin in Microstrategy’s balance sheet Table (He has since become a supporter of Bitcoin and bought another Bitcoin worth at least $50 million).
But they are not the only institutions embracing Bitcoin: celebrities including Citibank, Grayscale and Stanley Druckenmiller are all advocating digital currencies this year. Since the Federal Reserve has printed trillions of dollars in an attempt to fight the coronavirus, investors believe that Bitcoin can fight inflation and is hailed as “digital gold.”
Uniswap airdrop tokens
The US government announced a US$1,200 economic stimulus plan to help people tide over the difficult time of COVID-19, and the US dollar “money printing machine” model reached its peak.
When the decentralized exchange Uniswap airdropped 400 tokens to old users, members of the DeFi community found that they couldn’t help but compare themselves to decentralized exchanges. The initial transaction price of UNI tokens was 3 US dollars, which greatly rewarded LP. The UNI airdrop is also known as one of the most successful airdrops in the crypto circle. This action is to transfer the management of the agreement to the community, thereby making Uniswap more decentralized.
DeFi reaches USD 10 billion locked up
DeFi only thrived at the beginning of the year, when the total locked-in value was only over $600 million. In the summer, the DeFi format really began to soar. By mid-September, the internal lock-up amount of the DeFi protocol running on Ethereum had reached US$10 billion. At the same time, Metmask has 1 million monthly active users. As of today, DeFi’s TVL is close to $15 billion. As the industry grows, key indicators also indicate that decentralized finance will continue to exist.
Paypal adopts digital currency
Bitcoin has received increasing attention from the mainstream this year, and the biggest surprise was Paypal’s move to adopt cryptocurrency. In October of this year, the payment giant also announced plans to integrate options for the purchase of BTC, ETH, LTC and BCH.
Before allowing its US users to purchase cryptocurrency, unprecedented demand for this service caused Paypal to increase the cryptocurrency withdrawal limit. PayPal CEO Dan Dan Schulman later declared that he was “optimistic about all types of digital currencies.” This service shows that Paypal will soon provide encryption services based on legal payments.
Biden elected president
News organizations announced Joe Biden as the winner of this year’s presidential election, and Bitcoin plummeted; however, Biden’s long-term impact on the cryptocurrency field remains to be seen.
Despite this, crypto enthusiasts are still optimistic about Biden: because the crypto derivatives exchange FTX operated by Sam Bankman-Fried donated more than $5 million to his campaign (this is the second largest donation that Biden has received).
It is worth noting that the president-elect’s financial policy transition team will be led by Gary Gensler, the former chairman of the Commodity Futures Trading Commission. Biden has never publicly condemned Bitcoin like his predecessor, which may herald a bright future for Bitcoin.
I don’t like Bitcoin and other cryptocurrencies. They are not currencies, their value is extremely unstable, they are air coins. Unregulated crypto assets encourage illegal behavior, including drug dealing and other illegal activities…
–Trump, July 12, 2019
Stablecoin against hyperinflation
The use of stablecoins soared in 2020, not only because DeFi users pledged stablecoins in the agreement, but also because Circle cooperated with the Bolivarian Republic of Venezuela and Airtm.
With the support of the U.S. government, this initiative aims to provide a safe currency for medical workers and others who need it, and to combat hyperinflation in Venezuela. The use of digital currency for foreign aid is a precedent, but the application of digital currency is not limited to this.
Successful vaccine development
A vaccine for the treatment of the new coronavirus appeared on November 9. Pfizer and BioNTech announced the development of a COVID-19 vaccine with a 90% treatment efficiency. Next, before the United Kingdom became the first country in the world to approve this vaccine, Moderna announced that its treatment effectiveness was 95%.
We still don’t know whether a successful vaccine can directly affect cryptocurrencies, but there may be indirect effects: large pharmaceutical companies will eventually win, young people around the world will go out to consume, and the market will continue to be at risk.
Bitcoin breaks through all-time highs
The historically highest price of Bitcoin is debatable. Although many exchanges record that Bitcoin hit a high of approximately US$19,600 in December 2017, some people believe that the digital currency needs to break through the critical US$20,000 before it can reach a new high.
However, Bitcoin has already broken its all-time high of $19,860 in early December of this year. At this point, the historical high reached by multiple parties is not particularly important. It is important to know that Bitcoin has been running wildly. Since 2017, Bitcoin has set $10,000 as a key support level.
Since August, the price of Bitcoin has doubled. Many people have renewed interest in this asset because of this amazing data; there are signs that Bitcoin may have room for further growth before 2021.
Ethereum 2.0 released
Ethereum 2.0 has been discussed in the crypto community for many years. The upgrade of Ethereum was first proposed at the end of 2018, but as early as 2014, Vitalik Buterin was writing about the POS mechanism of the blockchain.
After a series of delays, the official announcement in early November that phase 0 of Ethereum 2.0, the beacon chain, was planned to go live on December 1. The beacon chain needs to wait until the pledge contract receives 524288 Ether before it can go online as planned. However, soon after, the Ethereum community united in the last 24 hours before the deadline and deposited more than 200,000 Ether. The beacon chain was successfully deployed on December 1, marking the beginning of Ethereum’s road to tranquility.
There are now more than 1 million Ether used for betting, and its price is also at the highest level of the year; its current value is about $600. If nothing goes wrong, Ethereum 2.0 will be launched in the next few years.
Visa adopts USDC payment
The Visa International organization unexpectedly announced a partnership with Circle to enable 60 million merchants worldwide to pay USDT. The company will also issue a card specifically for sending and receiving USDC payments. USDC is an ERC-20 token designed to be anchored to the price of the U.S. dollar and run on Ethereum. In other words, Visa is slowly beginning to adopt Ethereum and is ready to help people all over the world start using it.
S&P Dow Jones launches cryptocurrency index
S&P Dow Jones stated that it has plans to introduce cryptocurrency indexes in 2021 and has increased its investment portfolio including the S&P 500 Index and the Dow Jones Industrial Average. The company will work with blockchain company Lukka to receive data in more than 550 cryptocurrencies. From this, we can see that the day when the mainstream accepts the world of encryption is coming.
U.S. Congress introduces the STABLE Act
One of the most controversial events in the encryption industry is that the US Congress will introduce the STABLE Act at the end of this year. This bill is to counter the “risk of emerging digital payments” and is specifically aimed at Facebook’s Libra currency and stable currency.
Most supporters of this bill publicly put forward some ambiguous views, such as supporting cryptocurrency will increase the risk of related crimes and lead to the centralization of Ethereum nodes. These statements have been strongly resisted by the crypto community. Regardless of whether the outlook for cryptocurrencies in 2021 and beyond is optimistic, the STABLE Act indicates that the authorities are paying close attention to this area.
