Price surges and volatility are not uncommon in the volatile cryptocurrency market. HiFi Finance (HIFI), a decentralized lending system on the Ethereum blockchain, recently achieved an astounding 100% increase in just three days.
This rapid spike in value has sparked interest and conjecture in the cryptocurrency world, prompting the question: What is HiFi Finance, and what circumstances contributed to its unexpected price increase?
Lookonchain, a well-known Web3 data analysis organization, has just highlighted the reasons that have contributed to HIFI’s recent surge.
Understanding HiFi Finance (HIFI)
HiFi Finance is a Ethereum blockchain-based decentralized lending protocol. Hifi operates on specified maturity dates by utilizing decentralized interest rate marketplaces. The protocol uses an Automated Market Maker (AMM) architecture, in which users contribute tokens to “liquidity pools,” and an algorithm adjusts the interest rate dynamically based on supply and demand situations.
Users in the Hifi ecosystem can engage in activities such as supplying liquidity, borrowing, or lending across active marketplaces. Notably, borrowers gain from a set interest rate payable to lenders, which eliminates the need for complicated negotiations over parameters such as maturity, interest rates, or collateral. Users that participate in liquidity pools not only assist peer-to-peer lending and borrowing, but they also stand to gain benefits.
The HiFi ecosystem revolves around its native utility token, HIFI. Holders of HIFI tokens not only play an important role in the platform’s governance, but they also enjoy a variety of benefits within the HiFi Finance ecosystem. To understand the mechanisms of HIFI’s recent price spike, one must first understand its tokenomics. The total quantity of HIFI is limited to 126.25 million tokens, which will be distributed as follows:
- MFT holders: 100 million HIFI (79.2%)
- Hifi Labs: $25 million (19.8%) HIFI
- Airdrop: 1.25 million HIFI (1%)
According to the most recent data, the circulating supply is 95 million HIFI out of a total supply of 117.93 million HIFI.
Market Trends and Market Dominance
Analyzing trading patterns and volumes provides useful information into the recent price increase. According to Lookonchain’s data, the Korean exchange Upbit accounts for about 70.39% of HIFI’s trading activity. Notably, the price of HIFI on Upbit is 1.2% higher than on Binance, highlighting the importance of regional exchanges in determining the token’s value.
The Lookonchain report also provides information on how HIFI coins are distributed among the top holders. The top 20 holders collectively own 115 million HIFI, worth $138 million, accounting for a huge 95.76% of total supply. A deeper dig into the data, obtained from Nansen, reveals that exchanges own a significant fraction of the total HIFI token supply. Exchanges, in particular, account for 85% of total HIFI supply, with Upbit alone holding 65.2 million HIFI, equivalent to $78 million, accounting for 54.23% of total supply.
Overall, the increase in the price of HIFI can be linked to a number of causes, including high trading activity on the Upbit exchange, price fluctuations among exchanges, and a concentration of token ownership within a few number of addresses, mainly exchanges.
Understanding the deep mechanics of tokenomics and trade dynamics is becoming increasingly important for investors attempting to navigate this complicated and dynamic environment as the cryptocurrency market evolves.
Disclaimer: The information provided is not trading advice. Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.