Decentralized Finance DeFi: A New Wave of Wealth Creation

As the tide of wealth creation rises, the new wave of millionaires is more reminiscent of fallen gamblers than investment tycoons like Buffett. They are gambling on cryptocurrencies, even at the expense of their retirement funds, and sneer at financial icons like Buffett, who panic-sold Delta Air Lines shares at the beginning of the outbreak. They gather in Telegram chat rooms to exchange trading experiences, mobilize support for digital assets and engage in wars of words with short sellers and skeptics.

Last year, to celebrate the launch of its new digital currency UNI, decentralized cryptocurrency exchange Uniswap gave all its users 400 tokens for free. These 400 UNI tokens are currently worth up to $12,000.

The virtual space where these die-hard cryptocurrency fans hang out is called decentralized finance, or DeFi. Over the past year, Bitcoin prices have hit new highs, currently trading around $55,000, but it is the low-market-cap alt-coins that can offer the biggest returns to investors. With the rapid establishment of payment rails and smart contract services on blockchain ecosystems like Ethereum, a digital gold rush is emerging. If Bitcoin is the first iteration of cryptocurrency, then DeFi is the natural evolution.

Editor's Note: The first Canadian public company to bring DeFi to investors is DeFi Technologies Inc (NEO:DEFI), a company focused on investing, incubating and managing trading technologies related to the rapidly growing decentralized finance market. Decentralized finance is considered the next wave of financial innovation on the blockchain.

Many people rushed into this field under the call of a once-in-a-lifetime opportunity to make money, but they could not escape the fate of being defeated. The main driver of the 2017 altcoin bull market was retail investors chasing the next Bitcoin. However, the volatility of this market is unbearable for many people: Ethereum once suffered a flash crash, and the price fell from $319 to $0.10 in a few seconds, and many altcoins are essentially hype scams that were first pumped and then dumped. Retail investors who bought cryptocurrencies at the high point of 2017 and panic-sold when the market fluctuated became cannon fodder to warn those who came later.

So far, DeFi remains an unregulated Wild West. Recently, the SEC launched an investigation into Ripple Labs for allegedly issuing unregistered securities through the XRP token. Earlier this month, the blockchain project PAID Network was hacked, causing the price of the PAID token to plummet by more than 80%, and the virtual world bandit walked away with about $3 million worth of ether. As for whether the price of the token can recover and whether investors can get their initial investment back? Only God knows. However, if another low-market-cap DeFi project takes off now, retail investors may turn around and forget about losing money.

Thieves, federal investigations, cyberattacks, and a new crop of arrogant capitalists chasing the gold rush, this is the typical American capitalist love story exported to the world, but the scene of the story has shifted from oil fields to the chat software Telegram. Before companies rushed into Las Vegas and turned this town into a corporate paradise, it was a group of thugs who built this town. Today's cryptocurrency is very similar, and the application scenarios often involve money laundering, circumventing sanctions and regulation.

However, as institutions flock to DeFi and lawmakers continue to improve regulation in the field, the days of "lawlessness" may be coming to an end. Last December, the World Economic Forum (WEF) released a report titled "Cryptocurrency: What are its benefits?". The World Economic Forum sets trends for the global economy every year in Davos, but the forum does not focus entirely on Bitcoin, but on key players in the DeFi ecosystem, including decentralized exchanges like Uniswap. In addition, the report also revealed that Deutsche Bank recently opened a digital custody to provide investors with "lending, staking and voting" services - a hot concept in the DeFi field, that is, cryptocurrency holders lend digital assets and earn returns from other holders and exchanges. At the same time, lawmakers such as Rashida Tlaib have submitted bills to regulate stablecoins. Even blockchain analysis companies have begun implementing surveillance on blockchains to monitor financial transactions.

A lot of money is pouring into DeFi. Uniswap, for example, has a market cap of more than $17 billion. JPMorgan Chase said DeFi will pose a threat to traditional financial institutions, while last week Bank of America pointed out that Ethereum has more functions than Bitcoin. Now, the founders of cryptocurrencies rule the field like gods: $60 million to buy non-fungible tokens NFTs, airdrop a lot of money into tokens and set the whole market on fire. However, just as the company has a firm grip on Las Vegas, the control of DeFi will inevitably fall into the hands of the company. In the meantime, DeFi will be a gambling machine for gamblers.

People who are not good at gambling will lose everything if they buy Dogecoin at the top, while others will successfully take a position and achieve financial freedom before financial institutions enter the market.