There are bulls, bullshits and bubbles. DeFi may be moving too fast for “overly” cautious traders and investors. We can smell the scam, an impending explosion from a sector that frightens as much as it impresses. But no matter how well we have a nose for some things, some impressions don’t hold up when faced with facts.
DeFi explodes, but it won’t explode
The Total Value Locked (TVL) of DeFi recently exceeded the $ 9 billion. Many exchanges have added DeFi tokens to their listings, with the performance of some DeFi cryptos now largely exceeding that of Bitcoin (BTC). For example, the price of the token Yearn Finance (YFI) crossed the $ 38,000 mark.
Some observers believe that this impressive growth in the sector is akin to that of a financial bubble similar to that of the crypto market in 2017 and 2018.
The on-chain data aggregator, Dune Analytics, is not of that opinion. Its position is based on the number of active addresses in the sector.
This number is currently estimated at 400,000 units, a tiny figure compared, for example, to the millions of holders of Bitcoins, who all represent potential DeFi users.
These ghosts that make the fortune of DeFi
One of the main factors behind this growth is said to be a massive migration of capital, from defunct crypto projects to Ethereum (ETH) and DeFi.
Eric Conner, who participates in the project Gnosis, explained at the beginning of this year 2020, that these ghosts chains represent a potential value of $ 50 billion.
Andrew Kang of Mechanism Personal-Financial.com believes that DeFi will eventually hit an inflection point with increased liquidity and better tools.
In the short term, one of the biggest obstacles to the progress of DeFi is the high cost of transaction fees.
The co-founder of Coin Metrics, Jacob Franek, explained that traders would not be willing to pay such large amounts as if they achieved exceptional results.
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.
DeFi is therefore not a bubble, at least for Dune Analytics and the cryptophiles who share its opinion. These figures shed further light on traders and investors who now know more or less where they are stepping their feet. The land would not be mined even if DeFi’s TVL is currently exploding. Instead, we should leave room for an explosion of joy.
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