current position:Home>Defi Criticism: in addition to more speculation, it is also an amplifier of greed and fear

Defi Criticism: in addition to more speculation, it is also an amplifier of greed and fear

2022-02-02 18:46:02 Wu Shuo

author  | WS

edit  | Colin Wu

( The author's personal point of view , It doesn't mean that Wu said the blockchain position )

without doubt , The blockchain world is our era “ Call of Juarez ”,DeFi The field provides a lot of money making opportunities . I still can't believe it DeFi The development of has turned out to be so rapid and barbaric . Such as Aave,Uniswap General head projects continue to gain the interest of us listed companies and institutions ; There are countless “DeFi Lego ” Items in the head, such as Uniswap Provide services on the basis of , Such as providing leverage for market making (Alpha/Alpaca), Or constantly adjust positions to find the machine gun pool with the highest return (Yearn); Not to mention new projects that continue to go online , On the new public chain , Cutting new leeks . This article , Let's put aside our belief in blockchain and our vision for the future , Talk about now DeFi What exactly is it used for , What is the investment logic behind it .

 

DeFi Why rise ? What problems does it solve ?

Defi What problems have been solved ? If it doesn't include providing a quick way to roll money and run ,DeFi At present, the main purpose is to add leverage to fry money 、 Trade counterfeit currency 、 And insider trading .DeFi By encouraging users to use their own platform , Provide mining rewards (yield farming), Attract coin circle users to borrow locally at a negative cost 、 Stir fry coins with leverage , Or fast 、 Zero cost online 、 Trade counterfeit currency , Users can also trade DeFi Medium “ Synthetic stocks ” Complete Insider Trading in the stock market . You bet ,DeFi, Whether it's Aave The same decentralized loan agreement , still Uniswap The same decentralized exchange does provide a possibility for future finance , however , Their underlying asset is cryptocurrency , The biggest use of cryptocurrency at present , It's speculation . That means ,DeFi The problem solved by the project is : How to be better 、 More convenient speculation . They are not the least bit away from the financial system that changed the world .

however , For the coin circle itself ,DeFi It is undoubtedly a revolutionary innovation : When the cryptocurrency under leek leaves “ Stars and sea ” still more “ Development ” A few years ago ,DeFi Make their money useful ! With DeFi, These are currently air virtual currencies that can be used in Aave Lend to short sellers to earn interest rates , It can also be used in Uniswap Do liquidity mining to earn platform currency . After mining ,DeFi The emergence of cryptocurrency makes cryptocurrency holders in addition to their beliefs , There are more reasons not to sell .


DeFi – Greed and panic in the currency circle market

As mentioned above ,DeFi The emergence of provides users with more speculative tools , This is beneficial to the coin circle market as a whole .DeFi Not only does cryptocurrency have more reasons not to sell , Moreover, its own mining reward will increase the purchase demand of cryptocurrency . however ,DeFi The emergence of has also greatly increased the number and supply of cryptocurrency , Whether it's constant DeFi Platform currency itself , MLM coins produced for speculation 、 Air currency .

DeFi It increases both speculative demand and money supply for the currency circle , This has caused the rise and fall of the market to enlarge .

In a bull market , The users and new funds in the currency circle are incremental , They will be in various forms “ Pyramid selling currency ” and DeFi Attracted by the mining strategy of ,DeFi The emergence of provides more liquidity and buyer pressure for the coin circle . More transaction demand means higher DeFi Platform currency price , Higher platform currency price means higher liquidity mining reward , Higher mining incentives mean more miners , And more miners means more demand for cryptocurrency , More cryptocurrency demand means higher overall market value of the currency circle . This creates a spiral upward cycle , As the price of , There will be more new users and funds to participate in this market , So as to continue to promote the currency price .

DeFi The negative impact on the entire cryptocurrency market , Is reflected in “ Dig and sell ” The selling pressure brought by strategy to the market , And all kinds of MLM coins and air coins listed on decentralized exchanges . In a bear market , The users and funds in the currency circle are the stock , however DeFi Platform mining rewards and new “ Air currency ” Will continue to flow out to the market , Absorb the liquidity and capital of the market like a Vampire . Smart investors will use... When the market is unstable “ Dig and sell ” Strategy to achieve stable delta Neutral benefits : First hedge the fluctuation of base currency pair and then participate in mining , Then sell mining rewards every day 、 When the reward is reduced, put forward the principal . This is undoubtedly negative for the whole cryptocurrency market . Once the digging and selling strategy dominates the market , The hedging demand of miners will throw selling pressure in the futures market , The continuous decline of spot price will greatly reduce the demand of users to increase leverage , This has led to lower lending rates on lending platforms .

thus ,DeFi The locking volume and handling fee of the platform are also reduced , This affects DeFi Fundamentals of platform currency – Further promote “ Dig and sell ” The situation of . remove “ Dig and sell ” The spiral decline brought by strategy to the market , Decentralized exchanges also make new MLM currencies 、 Air currency is more rampant . adopt DEX, Anyone can issue money and provide a new cryptocurrency transaction pair - This is extremely unhealthy for the long-term development of the coin circle , Especially in a bear market . These MLM coins are sold through the height control panel and the built-in “ Destruction mechanisms ” Can violently push up the currency price in the short term , however , Once enough leek investment is attracted , The issuer can put all the coins into DEX The flow pool sucks up the fluidity , Or to “ The hacker attacks ” To take away the user's funds . Although the whole coin circle users are extremely disgusted with regulation , But if new users lose all their money on a zero MLM coin mining project , This is not what we want to see .

 

DeFi Where is your future

As long as central banks around the world continue to find excuses to provide excess liquidity to the market in the future as they do now , The real rate of return continues to be negative , There is no reason why more financial institutions will not try to invest in cryptocurrencies 、 Take a share in this profiteering field to ensure that their earnings do not run slower than the central bank printing money . This is also the response of major financial institutions to DeFi Sources of interest : Even in a bear market in the currency circle ,AAVE On 3% The stable currency deposit interest rate is better than any money market fund in the traditional financial market . The problem is , When the central bank finally had to close the valve of excessive money issuance , Speculative demand has fallen to freezing point ,DeFi What other application scenarios ? Maybe one day , We will return to nature , Put the commercial bill NFT turn , Get rid of banks through decentralization , Provide short-term financing for enterprises ? Or maybe with the explosion of the meta universe , We have more GDP Will be produced in the virtual metauniverse ,DeFi It will be the basic pillar of the meta cosmic economy ? No matter what , What we see today DeFi, Is supported by a virtual cryptocurrency , The main demand behind cryptocurrency , It's speculation .

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