IS DEFI A ONCE-IN-A-YEAR INVESTMENT OPPORTUNITY?

Former Messari product leader and well-known cryptocurrency trader Wang believes that the emerging DeFi market has huge growth potential.

DeFi has been soaring this year, and its locked total value has grown from less than $1 billion to the current nearly $8 billion. Since the beginning of 2020, the total value (in U.S. dollars) of TVL locked on all DeFi platforms has grown by more than 1,000%, and it does not seem to slow down anytime soon.

Data source: defipulse.com

Wang compares this year's DeFi boom to Bitcoin before 2013 and Ethereum before 2015. He said that this is an "asymmetric transaction once in a lifetime . " (Note: Asymmetric trading refers to looking for "controllable risks" and "returns that are much greater than risks", that is, transactions where risks and returns are not equal.)

He said that from an investment perspective, BTC before 2013 and ETH before 2015 are asymmetric transactions that are once in a lifetime. In my opinion, DeFi before 2021 is a once-in-decade opportunity. If you miss the first two, don't miss the latter.

This is completely different from the position of Messari founder Ryan Selkis, who earlier asserted that DeFi is a bubble that is destined to burst soon. He attributed it to the "Ponzi economy, deception, and extremely high rate of return," and added that high on-chain fees are making ordinary DeFi users less profitable.

Comparing DeFi with the trillion-dollar banking industry and traditional financial industry, we can see that DeFi has a lot of room for growth. Even compared to the crypto market as a whole, DeFi is only a small volume compared to the entire crypto market. The market value of 37 major DeFi tokens is only 6.7 billion US dollars, accounting for 2% of the total market value of all cryptocurrencies. %.

Many DeFi supporters believe that as long as investors are drawn from the multi-billion-dollar "Ghost Chain", the industry can continue to prosper. "Phantom Chain" is a popular blockchain project during the ICO boom in 2017. These projects have not been able to attract users continuously, but their value is still much higher than DeFi.

Tyler Reynolds, an engineer at Google Payments, today questioned the economic value of DeFi assets. He believes that the value of projects questioned as "no future" is much higher than certain DeFi tokens. He specifically cited projects with multi-billion dollar market value such as XRP, Bitcoin Cash, Bitcoin SV, EOS, Cardano, and Stellar, which is in stark contrast with Year Finance's YFI, which is only worth 670 million US dollars.

However, after a series of imitation projects and liquidity mining plans pushed Ethereum's Gas price to unsustainable highs, the DeFi bubble has recently shrunk slightly. Wang warned that there have been some dishonest (fraud) imitation projects in recent weeks, and you should be aware of the risks.

"In the past two months, there have been many bad projects, but don't be distracted by these garbage projects."

Instead, he suggested that people should try to use some better DeFi products to understand how this fledgling financial ecosystem fundamentally gives users new and interesting behaviors.

Wang also acknowledged that the current high yields of liquid mining may actually be a bubble, but this is not important in the long run:

"In fact, we may also believe that most high-yield projects are zero-sum bubbles that are destined to burst, but this does not affect liquidity mining as the future of the financial industry."

Original link:

https://cointelegraph.com/news/defi-is-a-once-in-a-decade-investment-opportunity-true-or-false