Is the “DeFi Get-Rich-Quick” Market Over? Or Is It Just Beginning?

This round of DeFi boom came suddenly and unexpectedly.

The triggering point was the launch of the COMP governance token on June 17. The surge in COMP’s price after its launch quickly triggered a wave of coin issuance for projects in the entire DeFi circle, and these projects in turn attracted the attention of investors.

From June 17th to now, in just over two months, the DeFi field has created a number of miracles, the biggest of which is YFI. As of the time of writing, the price of YFI has reached $25,277, which not only exceeds the current price of Bitcoin, but also exceeds the highest price in Bitcoin history. Even its imitation YFII has reached $3,738.

However, amid this vigorous trend, there is an obvious phenomenon in the circle that most of the old investors have missed this round of market, while new investors have actively participated, and stories of getting rich overnight are heard from time to time.

Old investors are almost universally pessimistic about DeFi. For example, Li Xiaolai believes that DeFi is too risky and will fail sooner or later; while Bao Erye is even more pessimistic, believing that "DeFi cannot survive because the overall scale of DeFi will not be too large, so there is no point in paying attention to DeFi."

Since the new investors are at the forefront of this round of development, they are very enthusiastic about DeFi. Of course, this enthusiasm is largely related to the wealth effect, which has driven many newcomers to rush into this field, eager to realize the myth of getting rich quickly.

How will DeFi develop after its current development? Will it continue to flourish or come to an abrupt end? Many people have great disagreements on this issue.

In my opinion, the most important thing to see how long an ecosystem can continue to develop is to see what its driving force is and how long this driving force can last .

In my article on August 13, "What is the difference between the current hot DeFi and the former 1CO?", I listed several typical differences between DeFi and 1CO: for example, DeFi is a practical application, and DeFi brings actual income to participants, which is a world of difference from the 1CO that was only in the imagination stage when it was raising funds.

This is an analysis based on the actual effects that DeFi has brought us. If we focus on DeFi itself, we will also find that its internal drive is fundamentally different from the previous ICO, and this difference is, in my opinion, a more critical driving force for the current and next development of DeFi.

This is the innovation of the model .

After 1CO entered a period of rapid development in 2016, its model has hardly changed in the subsequent development process - issuing ERC-20 tokens on Ethereum, and then users send ETH to the token contract in exchange for project tokens. As for the future value of the token, it depends entirely on the project party's publicity and demonstration, so the value of the token is largely subject to subjective influence.

When the project owner can no longer tell a more exciting story and starts to deceive general investors in a pyramid scheme manner, this kind of gameplay will naturally come to an end.

The current DeFi is completely different - the project does not rely on storytelling. At the first moment of landing, users can experience whether the project can bring value and benefits to themselves through personal participation. Therefore, in the field of DeFi, the biggest and most direct driving force for whether a project can become popular is whether the project itself can bring effects to users in terms of incentive mechanism, user experience and benefits.

I attribute the incentive mechanism, user experience and benefits to the model of the project itself . Therefore, the model of the project itself is the most fundamental driving force of the DeFi project, which depends on a series of hard-core elements such as the project's technical content, interface design, mechanism design, etc.

In the DeFi field, we find that when friends recommend projects to each other, they often say: Have you used XXX? I recommend you try it, it is so easy to use; Do you know XXX? Its XXX mining model is quite interesting, I recommend you try it - all of these are real objective feelings, not empty promises or stories.

It is this direct driving force that has caused many DeFi projects to become popular online as soon as they were launched. Why? Because it brings tangible benefits to users in the first place.

It is driven by this driving force that DeFi projects are constantly iterating and new projects are emerging one after another. Even if new projects are plagiarized, they will try to add a little innovation and a new way of playing on the basis of plagiarism. Isn't this what we have always called "mass innovation"?

In my opinion, this innovative momentum has not only not subsided, but has become even more intense. Now, new projects appearing every day are showing an increasingly strong momentum not only in quantity but also in quality.

Therefore, in my opinion, the current DeFi is not only far from reaching the end of its rope, but in fact, I am afraid that this innovation has just begun .