DeFi Summer
Summer 2020 — explosion of DeFi protocols, yield farming, governance tokens.
DeFi Summer is the term for the summer months of 2020 when decentralized finance exploded — from $1 billion TVL to $10+ billion in less than three months.
What happened:
•June 2020: Compound launches COMP governance token and distributes it to users → "liquidity mining" is born
•Users rush to Compound to farm COMP tokens (yield 100%+ APY)
•Yearn Finance (YFI) launched — 0 premine, 100% to community
•YFI goes from $3 to $44,000 in a few weeks
•Uniswap v2, Curve, Aave, SushiSwap — all explode
•"Food coins" — Yam, SushiSwap, HotDog — fast pump and dump
DeFi Summer legacy:
•Legitimization of DeFi as a financial sector
•Discovery of "liquidity mining" as a bootstrap mechanism
•Uniswap becomes the leading DEX
•Ethereum gas prices rose to $50+ for a simple transfer
Lesson:
•90%+ of DeFi Summer tokens lost >95% of value
•Fundamental protocols (Aave, Compound, Curve, Uniswap) survived and grew