VELVET, the native cryptocurrency of the AI-powered on-chain trading and portfolio management terminal Velvet, has recorded gains of almost 16 percent over the past 24 hours. While there are multiple factors behind the pump, the most critical is the decentralized finance and AI (DeFAI) narrative picking momentum.
DeFAI narrative propels VELVET token
According to the following data from Coingecko, VELVET has surged by roughly 15.9 percent over the past 24 hours, trading at around $0.584 as of Monday. The digital asset – ranked 138th based on reported market cap – currently holds a market cap of $246 million.
VELVET has had quite a volatile past month, recording an all-time high of $2.08 on June 29th, largely driven by the launch of synthetic pre-IPO markets for SpaceX, OpenAI, and Anthropic on the Velvet platform.
The synthetic pre-IPO product allowed traders to take leveraged on-chain positions tracking private company valuations – a genuinely new product that hit a hot narrative of private market access via DeFi, at exactly the right moment. However, the digital asset then crashed brutally, to the tune of about 76 percent.
At its peak, VELVET was overbought by a huge extent, with its relative strength index (RSI) hitting levels beyond 90. On July 10, a massive token unlock of around 10.4 million VELVET tokens hit the market, representing roughly 1 percent of the total supply worth $4.2 million at peak prices.
The token unlock initiated an immediate sell-off from early holders who had been accumulating the vast majority of token supply. What’s even more worrying is that 4 more token unlocks are scheduled to follow on August 10, September 10, and October 10.
However, the surge over the past 24 hours shows that the DeFAI narrative still has some legs. As a DeFAI Operating System, Velvet boasts of more than 100,000 users across networks like BNB Chain, Solana, Base, and Ethereum.
It is worth emphasizing that 50 percent of all protocol fees on Velvet are used to buy back and distribute VELVET to reVELVET stakers, thereby enabling a direct fee-to-token value accrual mechanism.
Can DeFi season make a return?
Seasoned participants of the crypto market remember 2020’s so-called “DeFi summer” which saw all the newly-launched DeFi tokens like AAVE, BAL, BNT, UNI, and others go on parabolic rallies over a few weeks.
While DeFAI is a fairly recent narrative, the underlying force remains the same – the rising adoption of DeFi. Recently, a series of positive developments in the industry suggests that DeFi may be making a return.
An increasing number of projects are working toward solving some of the most pressing infrastructural hurdles facing the DeFi space. That said, DeFi protocol exploits continue to mar cast doubts over the safety of these emerging avenues.
