Will DeFi survive the madness?
Have you been DeFi recently?
DeFi is undoubtedly the hottest topic recently. The innovation speed of DeFi this time is also lightning fast, and various new ways of playing are emerging in an endless stream, so that many "old leeks" have paid a lot of IQ tax and have not figured out the game yet. The rules have been run over by the wheels of DeFi time and time again.
From the failure of the announcement of "Sweet Potato" to the recent UNI's initiative to give users wool, although "Sushi", "Big Uncle", "Second Uncle", "Bread" and other projects have had ups and downs and mixed reviews in the development process, but Gao The heat brought by the income has allowed DeFi to continue to fly on the wind. Some people say that DeFi is the hope of open finance, and some people say that it is "Isio" in disguise. From an unknown "poor boy" to a "hands-on" in the circle in a short period of time, the trend of DeFi can be described as crazy .
Various communities are still discussing how much DeFi can squeeze out, and DeFi has fallen. DeFi tokens with large market capitalization such as YFI, UNI, and LEND all experienced a sharp drop, with a 24-hour drop of about 20%.
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How crazy is DeFi?
(According to the data of Feixiaohao in the past year, it can be seen that the amount of DeFi lockups was basically stable before June 14 this year. Since June 14th, the fast lane has been opened and it has been rising all the way. As of press time, the highest total lock-up value exceeds 10 billion US dollars, and the lock-up value accounts for 2.9% of the global total market value. The total lock-up value has increased by more than 10 times in 3 months.
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Reasons for DeFi's popularity
Calmness will always return after the madness, and the sharp drop in the overall DeFi sector this time has also brought the market back to rationality. Existence is reasonable, and the reason for the emergence of DeFi is the market demand.
High income
safety
safety
Due to the sequelae left by unplugging network cables, downtime, and no way to defend rights, the demand for transaction transparency and asset control continues to increase. After all, machines do not need to be trusted, and they would rather step on the pit of the code than be manipulated by the palm middle.
The popularity of DeFi depends on market demand, but it is also fueled by hype. Market hype is far greater than participation. When everyone participates in it with a speculative mentality, the bubble will not be far from bursting.
Security Question
Security Question
As DeFi is a decentralized finance, security issues are naturally the top priority. After all, there is no pause and return button in decentralization. Although the DeFi market is booming, many projects have entered the market without contract audit; even if they pass the contract audit, there will still be problems with loopholes and backdoors. In April of this year, Uniswap was exploited to steal hundreds of thousands of dollars in assets due to smart contract loopholes; YAM was also "forced to collapse" due to a line of code. Security issues are the root of decentralized finance.
High learning threshold
Compared with the operability of traditional encrypted asset transactions, the operation difficulty of DeFi is even higher. Many DeFi communities have many questions about how to operate and how to participate. According to Feixiaohao, most of the DeFi projects currently on the market come with participation tutorials to reduce the resistance of users to participate.
Gas costs are high
Due to the popularity of DeFi, the price of Gas has risen, and the more congested the network, the higher the price of Gas. In recent months, the price of Gas has risen from 10gwei to 400gwei, an increase of nearly 40 times. A transaction fee of nearly one hundred dollars is not friendly to small and medium retail investors.
over hyped
The excessive popularity of DeFi has also attracted many unscrupulous people. Based on the heat of the bubble, they once again hype the DeFi currency circle for a year, exaggerate the benefits of DeFi, and attract more people without demand to invest blindly with a speculative mentality.
The world is not black and white. The overheating of DeFi has spawned bubbles. The industry needs to cool down, and more importantly, it needs to reflect. Even so, DeFi still has its innovation and irreplaceability. The barrier-free circulation of encrypted assets and innovative financial methods in the blockchain field fill the gaps in the traditional financial field.
Opportunities and challenges coexist. After the continuous elimination and polishing of the market, there will be truly valuable projects left, and DeFi will become an indispensable application in the decentralized field.
Everything is left to time.
