Messari founder: DeFi bubble is about to burst, and there are not enough victims

Ryan Selkis, founder of crypto data site Messari, predicts that DeFi is about to die — similar to what happened with ICOs.

He tweeted:

“The DeFi bubble is bursting faster than anyone expected. We are approaching the apex of Ponzi economics, deception, and yield hopping (short-term mining profits), and ETH fees will excessively eat up non-whale earnings.”

In recent weeks, many DeFi projects have seemingly popped up out of nowhere, offering large yields and loans to drive compound returns in this complex ecosystem. However, some of these projects package themselves as legitimate investment platforms, but then take investors' money and disappear - this is known in the industry as a "rug pull."

SushiSwap is the latest rug pull, albeit only partially so. The project’s lead, Chef Nomi, walked away with a portion of the developer funds, leaving FTX exchange CEO Sam Bankman-Fried (SBF) to pick up the pieces.

Selkis said:

“ICOs thrived for a while because everyone (ridiculously) thought there would be a utility token for every industry. DeFi is just a big pool of capital around a small group of insiders and profiteers, and there are not enough victims soon.”

ICOs had their glory days in 2017, when the market environment was similar to today’s DeFi. Projects based on just a concept were able to successfully raise millions of dollars in a matter of minutes.

Selkis said he is not closed to other opinions, even though the current situation seems too lucrative for reality. He also said he is not against the movement as a whole.

“For what it’s worth, I like this experiment. Like ICOs, liquidity mining or incentivized liquidity provision is an innovation in capital formation. Smart people are making money. But I don’t recommend DeFi to most people because the risks are too high.”

Ultimately, progress around DeFi will drive the crypto industry forward. Bumps in the road may not be pleasant, but they may also be normal.

Link to this article: https://www.8btc.com/article/646099
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Original article: https://cointelegraph.com/news/messari-s-ryan-selkis-says-defi-bubble-will-pop-soon
By Benjamin Pirus
Compiled by: Wendy
Source (translation): Babbitt Information (https://www.8btc.com/article/646099)