When the COVID-19 pandemic erupted in early 2020, it wreaked havoc on human lives and the global economy. The cryptocurrency world was also affected as the cryptocurrency market collapsed in March of the same year. Bitcoin lost 52% of its dollar value in one day and Ether lost 43%, shocking the decentralized finance (DeFi) world with its decline.
The resulting lockdowns had a slower but more profound impact on crypto. As the world became confined to their homes, screen time steadily increased and interest in cryptocurrencies rose, as did market capitalization. Soon new technologies were being developed and implemented at an unprecedented pace. Cointelegraph
DeFi is flying to the moon
The first steps in the DeFi space were taken in 2017 with the development of smart contracts on the Ethereum blockchain. MakerDAO and Compound were early market leaders. In June 2020, Compound introduced yield farming, also known as liquidity mining, an arbitrage method that moves crypto assets to earn the highest interest, fees and rewards. It is now common practice.
Related: Whales benefit greatly from lucrative DeFi yield farming: data shows
Compound was also a pioneer of decentralization. COMP (COMP) was also the first governance token that allowed users to directly participate in the governance of the Decentralized Autonomous Organization (DAO). By the end of the year, decentralization was well advanced in many DAOs.
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A DAO is an organization governed by enforced digital rules without hierarchical governance. It is similar to Bitcoin in its attempt to get rid of all the middlemen in transactions.
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By September 2020, the amount of DeFi collateral had increased to $9 billion from $700 million at the start of the year. Around this time, Bloomberg wrote:
“A cryptocurrency mania known as decentralized finance has helped make digital currencies by far the best-performing asset this year.”
Decentralized exchanges (DEXs) also played an important role. These already existed in 2020, with OasisDEX launching in 2016 and Uniswap in 2018. A DEX allows users to trade crypto assets peer-to-peer – without an intermediary. DEXs, in turn, gave rise to automated market makers that took advantage of yield farming. 
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Related: The problem with automated market makers
The result of all this activity was a bubble or “period of price explosion” known in the crypto world as DeFi Summer 2020.
The third Bitcoin halving
The third Bitcoin halving took place on May 11, 2020, just before the start of the DeFi summer. The halving is an event in which mining rewards are reduced by 50% after every 210,000 BTC are mined. In 2020, the reward for mining a block was reduced to 6.25 BTC. 
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Related: Lots of action, but no bull rally: This is how the Bitcoin halving went
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The halving is intended to prevent inflation by slowing the pace of mining while increasing demand by slowing production. During the third halving, BTC sold for around $8,800. It recorded small gains in July and August 2020, and in October the price began a significant upward trend, rising to $63,000 by April 2021.
2021: The year of the NFT
Non-fungible tokens (NFTs) are unique digital items on a blockchain. They are also several years old, but it wasn't until 2021 that the market really got going. They are at the heart of today's real-world asset tokenization boom and are used for ticket sales, licensing, gaming, identity verification, music, and a variety of other purposes. Their earliest uses were games, collectibles and works of art.
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CryptoKitties was a first glimpse of the future. Developed by Dapper Labs and launched in 2017, the game used NFTs to collect, trade and breed digital virtual cats. Cointelegraph later noted: “This cat-breeding digital blockchain game caused quite a bit of congestion on the Ethereum blockchain, which peaked in 2020.” The CryptoPunks collector series also appeared in 2017.
Related: What’s left in the NFT market after the dust settles?
The Bored Ape Yacht Club line was launched in April 2021. Creator Yuga Labs sold all 10,000 of them by the end of the month, raising $3 billion. Then in August 2021, the more cost-effective Mutant Ape Yacht Club was launched, which is still in use today.
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Cointelegraph
In 2017, there were around 120,000 NFT users. The number rose to 1 million in 2020, to 3.5 million in 2021 and then to 9.9 million the following year. Revenue from NFTs increased by almost 40,000% from 2019 to 2021 but fell sharply in 2022. OpenSea, a marketplace founded in 2017, held 87% of the NFT market at the start of 2022, but trading volume fell by 99% over the year. Regardless, NFT sales continue to grow and are expected to reach $2.4 billion in 2024.
Magazine: There’s no need to be upset about NFTs
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