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From the collapse of YAM to the decline of Sushi, some people say that DeFi has entered its end. However, after UniSwap issued its token, DeFi has seen another rise. In particular, Uni once reached around 8 yuan. But the good times did not last long. Recently, the leading DeFi YFI has begun to fall, and UNI has also returned from the highest of 8 yuan to around 4 yuan. Is DeFi really coming to an end?
01.
Chinese people often say that "the final conclusion" is the final word. Let's not worry about whether DeFi can really end, and try to talk about the significance of DeFi to this wave of blockchain market.
The core part of DeFi should be liquidity mining, that is, DeFi should be committed to providing crypto participants with a way to borrow and lend digital assets and earn interest on their holdings.
This is very similar to the function of banks in traditional finance, except that these liquidity mining projects not only give interest, but also give extra coins. In other words, whether you are a lender or a borrower, you can not only get asset interest from the platform, but also get extra coins from the platform. This is the difference between DeFi and traditional financial institutions, and it is also the most fundamental part.
02.
I think the birth of DeFi marks the beginning of a new stage for blockchain, which is called the "value storage" stage. This can be seen as two different eras from the ICO boom in 2017. When ICO boomed, everyone was working on various chains. This era should be called the "value recognition" era, which means that if I create a project and issue a coin, I want the community to recognize that my coin is valuable.
So in 2017-2018, we often had questions. Is this coin valuable? Will it return to zero? These questions actually also include Bitcoin and Ethereum . In other words, at that time, there was no consensus on the value of Bitcoin, and some people still questioned whether Bitcoin was valuable.
The biggest significance of the emergence of DeFi is that it has completed the transition from whether Bitcoin is valuable to whether Bitcoin can make money. In this transition, some people have reached a consensus on the value of Bitcoin and Ethereum, which means that after DeFi, there is basically no need to worry about the return of Bitcoin and Ethereum to zero, and you only need to consider how much profit they can generate.
In fact, there is another point, that is, although Bitcoin has the concept of "51% attack", Bitcoin whales still have an impact on the price of Bitcoin. When DeFi appears, some of the Bitcoins of these whales are locked in DeFi projects, which will play a certain role in stabilizing the price of Bitcoin.
So I say this is an advancement in value.
03.
Let's talk about the issue of currency issuance. As mentioned above, when I go to a bank to deposit money or take out a loan, isn't it strange that the bank will give me stocks?
In fact, this kind of thing is not surprising in the cryptocurrency circle, because it is a unique way for the cryptocurrency circle to attract new users. Just like banks need to advertise and redeem points for prizes, the cryptocurrency circle saves the marketing costs of banks and replaces them with issuing coins. The most typical case is that when UniSwap did not issue coins, SushiSwap took away 70% of the funds. The rules of the game are like this. If you don't do it, other projects will take advantage of it.
Therefore, issuing coins is not surprising in the cryptocurrency circle, and compared with the marketing costs of banks, issuing coins by DeFi projects may be cheaper.
04.
With the emergence of DeFi and the emergence of capital pools, blockchain finance can begin to imagine the exchange leverage, financing and financial management, decentralized insurance, and even derivative investment, art investment, etc. It can be said that the emergence of DeFi has directly stimulated the rapid growth of the blockchain financial chain, making it possible for the value of blockchain to double.
As for whether DeFi and The DAO are similar, we have already talked about it above. The emergence of The DAO concept is the stage of "value recognition" in the formal blockchain world, so crowdfunding coins are used to purchase physical objects. The purpose is to complete the process of value consensus. DeFi and The DAO are not products of the same era, so they are not similar.
Some people say that DeFi is a Ponzi scheme, but I think that DeFi itself is not a Ponzi scheme. After all, a Ponzi scheme is based on taking over. The concept of DeFi itself is value storage, and the borrowing and lending of digital currencies can indeed generate income, so there is no basis for a Ponzi scheme.
There are Ponzi schemes in DeFi projects, which is mainly due to the establishment of individual projects. Just like SushiSwap itself has not established a revenue chain, if it only relies on copying codes and issuing coins, it will end up being just an empty shell project, so this project is also a Ponzi scheme.
However, whether in the physical world or the digital world, you must be trustworthy when doing finance. After all, it’s a matter of money, and the same is true for DeFi. If you don’t keep your word, you can’t do financial projects anymore. This is the most fundamental principle. Look at Sushi and YAM, they are actually the same. (Mars Finance) |
