Is DeFi done already?
I heard you shout an answer to the topic question before clicking on this article, well; yay or nay, we got the same answer…depending on your perspective. It’s hard to correctly guess what anyone thinks, but it is easier to understand why they think so, eventually we are actually riding on your thoughts this time around.
Decentralized finance cryptocurrency projects are running riot, starting off in the second quarter of the previous year and extending their space trip throughout the year, arguably the best performing crypto sector for the year. Bitcoin maximalist surely have some regrets there and for some reason they are reassessing their orientation of what a ‘shitcoin’ is and how they missed out on that run. I guess a couple of them were able to let go of their ego and shop the market for some ‘yield farmers token’.
An average DeFi token did well over 5x in gains, if you’ve been holding on to some Aave, then that will be a peasant gain for you, but that’s a whole lot for anyone. The crypto space bought into the idea of decentralized finance in what has been a perfect display of how the crypto space moves; enormous gains, outrageous predictions, smashed price resistance, propagandas, illusions, FOMO and FUDs. The events surrounding DeFi and its tokens have led to the thrilling price moves, and the only tangible effect of DeFi on the crypto space is the returns on investments.
Just like the privacy coin boom which ushered in a period of amazing technological inventions and clever algorithms which help to keep transactions as private as possible, the DeFi boom is also significant for the price actions they caused. Apart from the fact that some cryptocurrencies did a 20x while other notable projects languished in the bear market; DeFi projects have introduced a number of commendable protocols. After this run of events, the journey is just getting started…according to many.
For some reasons, many still believes the DeFi run is still getting started, frankly, I hope that happens and maybe we will get to see certain DeFi projects return to their glory days. Well, that’s easier said, but the crypto space is a home of possibilities.
In terms of development and breakthroughs, the concept of DeFi is just getting started and it will be crazy to say “DeFi is done” in this aspect. Decentralized financial systems comprises applications built on top of blockchains which facilitates permissionless financial services and provides a seamless option for running financial activities. DeFi hopes to introduce the core virtues of blockchain technology to the financial system. The bitcoin blockchain introduced the concept of ‘decentralized means of payment’ which runs on a distributed ledger system, the blockchain.
DeFi projects are however, expanding the scope of decentralized financial system, shifting the paradigm from ‘portable means’ of payments to smart contract applications running independently on a parent blockchain and offering advanced financial services such as insurance, lending, wealth management and an array of other financial activities using blockchain resources and exhibiting desired blockchain features such immutability, security, privacy, speed and interoperability.
Of these features, ‘yield farming’ has gained its place as the most exciting prospect of decentralized financial systems. The idea of leveraging DeFi protocols to generate interest returns of up to 100% of your initial investment per annum and a couple of other benefits will surely impress any investor. Due to this, DeFi presents an enticing opportunity for mainstream investors to dive into the crypto space — probably why the buzz happened.
In this aspect, DeFi is still getting started and very far from done, taking a look at the foregoing, this concept is still being furnished as new DeFi projects are emerging with better offers and solutions to issues faced by existing projects while already existing continue developing their concepts to survive the DeFi market, which is growing tense as each day passes.
Many traders are yet to set a stop loss for their DeFi tokens, and you’re probably watching the charts and looking out for a convincing DeFi token to buy and hope for some 10x gains. Once again, cryptocurrency prices are hard to predict and for every reason, it is important to do your research and stick to your intuition. Best way to do it, in my honest opinion.
That being said, despite the fact that DeFi as a concept would impress anyone and the idea of high rate interests excites an investor, especially when you are in for a long term. However, the mind-blowing run of gains for DeFi token can be traced down to the usual propaganda and the popular fear of missing out.
Well, it will be hasty to say DeFi is done in term of price action, but it is important to note that things may swing towards any direction now. With most cryptocurrencies being ‘over bought’, some ‘profit taking’ may follow and price might run down in the coming days. While there might still be some gas left in the DeFi rocket, the speed is set to get slower and the bumps ahead may get higher, hence it is advised to thread the DeFi path with caution. The high interest rate maybe enough to cover for any loss by the way, but sometimes this might be too much that it burns hands.
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