A number of decentralized finance protocols experienced volatility around the $1 billion mark in 2020, briefly making some of them unicorns in the crypto space. Though the 2020 numbers are comparable to the number of projects that emerged as unicorns during the 2017 initial coin offering boom, Gemini co-founder Cameron Winklevoss said in September that DeFi protocols have more staying power:
"Back then, money was raised on shitcoin white papers written in a coffee shops. DeFi is already live and working in the wild. Billions of dollars are at work earning positive yield. This isn’t hypothetical vaporware, this is real."
This platform pays users interest on locked funds in exchange for loans. Aave was one DeFi project to reach $1 billion in market capitalization in 2020, but its value has dipped under crypto unicorn status a few times following news of a $6 million flash loan exploit. The protocol’s own LEND token — which has migrated to a new AAVE token — surged after Aave received an Electronic Money Institution license from the United Kingdom Financial Conduct Authority in August.
The DeFi protocol unveiled its second version earlier this month, which will reportedly make improvements on flash loans and the use of collateral for reconciling loans.
The market capitalization of YFI reached $1 billion in August before hitting an all-time high on Sept. 12. Though many consider YFI to be one of the top tokens in DeFi, it hasn’t regained its crypto unicorn status since September. At the time of publication, the token’s market capitalization was roughly $750 million.
Interest in the Yearn.finance DeFi platform has surged since it launched its native token, YFI, in July. The yield aggregating platform provides liquidity through smart contracts and offers interest to liquidity providers.
Synthetix is a decentralized exchange built on the Ethereum blockchain through a series of smart contracts. However, Synthetix does not offer trading between crypto assets like tokens and stablecoins, but rather between “Synths” created by using another asset as collateral.
This DeFi platform passed $1 billion in total value locked in August. Its Synthetix Network Token (SNX) made substantial gains this year, having hit its all-time high of $7.74 on Sept. 11, rallying more than 400% from its price at the beginning of 2020.
Harvest Finance may have had one of the briefest stints as a crypto unicorn this year. The DeFi protocol collected as much as $1 billion in total value locked before a hacker was able to launch an attack on Harvest’s liquidity pools, draining $24 million. News of the exploit caused the total value locked of the protocol to drop almost half a billion dollars in 24 hours.
Operating similarly to Yearn, Harvest Finance is an automated yield management system that allows users to earn interest after supplying certain crypto assets for lending.
Outside of DeFi projects, blockchain analytics firm Chainalysis has expanded rapidly in 2020, raising its total valuation to more than $1 billion following a $100 million financing round last month. The firm develops investigative tools that enable companies, governments and law enforcement agencies to monitor blockchain transactions and track suspected illicit activities.
There were other crypto unicorns that popped up in 2020, as well. With Bitcoin (BTC) rising to more than $23,000 for the first time in history and Ether (ETH) passing $600 for the first time in two years, this year has been rather bullish for major digital assets and new DeFi projects.
Filecoin was one of the fastest blockchains to gain and lose crypto unicorn status this year. After the network launched its mainnet on Oct. 15, Filecoin’s FIL token surged 118% to reach a market cap of just over $1 billion before the price plunged nearly 80%. FIL’s market cap didn’t return to the same level until a month later and currently stands at $1.3 billion.
Polkadot followed the same pattern as Filecoin, with its DOT token quickly growing to a market cap of more than $5 billion. The blockchain has been live since May as a permissioned "proof-of-authority" network but launched its mainnet in late July. Polkadot does not directly compete against the Ethereum network and allows multiple blockchain networks to exist on its protocols.