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The DeFi industry will fall victim to its popularity

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The DeFi industry will fall victim to its popularity

The DeFi industry will fall victim to its popularity
CONTENT

  • Waves founder and CEO Alexander Ivanov warned of possible ICO bubble formation

  • Ivanov believes that the future belongs to DeFi, but is worried about the excitement around the industry.

  • DeFi’s popularity is growing exponentially

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Waves Association Founder Alexander Ivanov Warns Explosive Growth Of Decentralized Finance Industry May Have Negative Implications.

DeFi – a new version of the ICO boom

According to him, the rise in popularity of decentralized finance (DeFi) Decentralized finance (DeFi) is financial services built on the basis of blockchain technology that offer users access to an open, efficient and … More … More) can backfire and harm a promising sector. In a recent tweet, he compared DeFi to the ICO craze in 2017:

The DeFi industry will fall victim to its popularity

“Please, let’s not inflate another ICO bubble from #DeFI”.

When asked to comment on this statement, Ivanov noted that he is fully confident in DeFi, but worried about the hype around these tools:

“DeFi is the future, but they will soon face a bubble in the cycle that could hinder long-term development.”.

According to Ivanov, DeFi tokens “are definitely useful and have mechanisms of work that give them value.” However, “sometimes prices may not be justified, leading to the formation of bubbles.”.

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He also added that while DeFi apps and services may seem less attractive to inexperienced investors compared to ICOs due to their complex structure, they are more likely to suffer from volatility and sudden price drops:

“DeFi products are more complex in nature than simple ICO tokens, which is likely to limit the influx of unqualified investors, but the inevitable volatility and price crash could seriously undermine the otherwise brilliant prospects for mass adoption of DeFi.”.

Decentralized finance on the rise

The popularity of DeFi has grown rapidly lately. Specifically, over 1,000 new DeFi assets were added in May, nearly 10 times more than the same period last year. At the same time, the total number of DeFi users is gradually approaching 600,000..

The DeFi industry will fall victim to its popularity

Accordingly, many DeFi-based tokens have risen dramatically in 2020, with some up more than 60% in the last week alone..

Data compiled by DeFi Pulse shows that the total value locked in decentralized financial systems hit an all-time high last week. Total DeFi funds currently stand at $ 1.53 billion, up from a previous high of $ 1.24 billion in February 2020.

After June 14 rallies, DeFi’s total Ether, Bitcoin and Dai grew by over 58%.

Basically, DeFi imitates mainstream finance, but they have a big difference: they are not controlled by the governing bodies (for example, like how the Fed can print money when it wants to, choose which companies to bail, manipulate the stock market, etc.).

DeFi offers people an alternative system through smart contracts.

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