Why learn DeFi, this is the best answer I have seen

The DeFi fire is real.

Is this thing reliable?

How does DeFi make money? Will DeFi be a flash in the pan, or will it be a chicken feather? Can the opposite be a direction of entrepreneurship? Will it be a big outlet for making money?

I believe you have heard some news that what kind of project locks up hundreds of millions of dollars in a few hours, and it rises 30 times as soon as it is issued! This is about DeFi projects.

So, why learn DeFi? The significance of this matter is obvious.

First of all, let’s take a look at the scale of the DeFi industry.

We use the total value locked (TVL) as an indicator to measure its asset size.

What is Total Value Locked (TVL)? If you think of DeFi as a large financial institution, such as a bank, then TVL is the size of the basic assets in this financial institution, and all assets in DeFi can be regarded as derivatives of these basic assets.

So what is the change in the total locked value of DeFi?

As shown in the figure, you can see that from 2017 to 2019, the total locked value (TVL) of DeFi grew slowly. Until July 2019, the locked market value was 200 to 300 million US dollars look.

By February 2020, before the outbreak of the global epidemic, the total locked value of DeFi rose to 1 billion US dollars.

It was at that time that many people decided to all in DeFi, but followed by 312 Black Thursday, when mainstream assets such as Bitcoin and Ethereum plummeted by 40%, and DeFi was even worse, falling by 60%, shrinking to 400 million U.S. dollars, and then it took two months to heal and recover to 1 billion U.S. dollars.

When the core project Compound started in mid-June, it started liquidity mining. In just two and a half months, according to a conservative estimate, the total value of DeFi’s locked positions soared 9 times.

Through the total value of locked positions, we can see that the DeFi fire is really hot.

So, is DeFi valuable? Of course very valuable.

So, is there a bubble in DeFi? Of course it is inevitable.

I mentioned it in the previous article, because I believe that when we study Defi, we study its development opportunities, rather than withdrawing after making a little money or losing a little money in a daze. If so, it’s better not to study it, because you can’t understand its logic. Even if you make money, it’s just luck, and the money you make by luck is often lost by skill.

But when we get to the bottom of it, we have to see that DeFi has real value and direction.

Let’s take a look at the pillar project of DeFi: maker.

It is one of the earliest DeFi projects, and it is also the leader among DeFi projects. Its essence is a decentralized algorithmic central bank. Through the passive liquidation of excess mortgages, it realizes a central bank model such as a pawn shop around the clock, providing the DeFi world with base currency. At present, there is no central bank of a country in the world to implement such a model, but it was first realized by Maker in DeFi.

There are also DeFi's compound and Aave.

These are two super-projects that enable mortgage lending and act as intermediaries between the supply and demand of funds without creating money. Because of the success of compound and Aave, the way we participate in digital assets has changed. Suppose you want to hoard BTC and ETH, but at the same time you want to participate in the investment of a certain project. In the past, you could only choose one of these two goals, but Now under the mortgage loan model, you can not only keep the original assets, but also participate in promising projects, which improves the utilization rate of funds.

Let’s talk about another exchange. In fact, the exchange in DeFi may be the most successful. Its number one exchange is called Uniswap, and its current trading volume has ranked among the top 5 in the world. Therefore, the development of DeFi is too fast, and its progress is real and meaningful.

Of course, with such rapid development, without the restraint and coordination of regulatory agencies, some chaos is inevitable.

Angels dance with devils, there are both very positive and very negative things. You can't ask for a thing to be perfect, and when a thing is still in the development stage, there are always many people who will disturb the water.

So, is DeFi sustainable? I think it's sustainable.

We admit that it does have many problems, but these problems can be overcome and gradually adjusted by the market, while some of the advantages of DeFi are real progress and innovation.

DeFi has created a brand-new account system, which operates in the global financial market. It promotes the transparency of corporate business data. Your entire business data is transparent. Investors can know whether you are worth investing in at a glance. In this case The structure of the entire capital market has also undergone tremendous changes, and transaction friction has been greatly reduced. It can be said that it is a complete reconstruction of the entire financial market.

Most of us have experienced the baptism of the Internet and mobile Internet. There are various problems at the beginning of the development of new technologies, but no one can deny that the Internet is one of the greatest innovations and inventions of mankind, and we all benefit from it .

I believe that blockchain and DeFi as a blockchain application, with effective supervision and the construction of market order, will also be generally understood, accepted and recognized by the society, and will achieve long-term sustainable development and have a bright future.

Why study DeFi? I think this is the meaning!