Despite the huge amounts of capital that constantly floods it, DeFi currently enjoys a low valuation compared to blockchains. EOS, Cardano, Tron, or even Bitcoin SV which have market capitalizations of several billion dollars. At the same time, DeFi’s main protocol, Yearn.finance (YFI), only has 960 million. If this is not surprising at first glance, a Google engineer has just castigated the reasons for this gap. He also predicts that this reality will be reversed, propelling DeFi in front of the blockchains concerned.
Projects without a future that have managed to mobilize billions
Engineer at Google Payments, Tyler reynolds finds it hard to imagine that the YFI protocol has a capitalization of less than $ 1 billion. He finds especially illogical that XRP, Bitcoin Cash, Bitcoin SV, EOS, Cardano and Stellar Lumens have exceeded this figure while they are projects according to him “without a future”. He nonetheless mentions the three factors that allowed them to reach this stage despite the lack of adoption of which they are victims. These include small supply with restricted circulation, market manipulation and large-scale marketing to vulnerable people.
If the argument of lack of adoption seems to hold true in the case of bitcoin forks (BCH, BSV), it would be quite different with the other projects. This is particularly the case with Cardano and EOS as claimed by investor Allen Hena. He said in particular that it was about two legitimate projects with an active community. Other specialists who are of the same opinion justify the low adoption of blockchains pointed out by Mr. Reynolds by the excellent form of Ethereum and its protocols. In the long run, in the end, this preference could be fatal to them.
The reign of DeFi is fast approaching
Many in the industry expect the billions held by these less competitive blockchains change hands in favor of the Challenge. This is particularly the case of the Ethereum specialist whose comments are reported to us by CryptoSlate : “There is well over $ 50 billion in market value for blockchains that no one uses. This liquidity will all be sucked up by DeFi applications with actual use by the end of this market cycle “.
This idea was also mentioned by Jason choi who works at Spartan Group a cryptocurrency hedge fund. “I can’t find a defensible thesis for most BTC forks (LTC, BCH, BSV) over the long term. With the emergence of paid tokens in DeFi, it seems natural that the capital parked in these projects is donated to BTC or DeFi “.
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The cost of transactions may be high on Ethereum, but analysts are confident that the blockchain will retain the preference of users and investors. Its adoption is therefore the major strength of DeFi protocols in this race against secondary blockchains.