Into the rabbit hole
So I just went into the rabbit hole of Decentralized finance (DeFi) after learning the reason for this year's stellar BTC and crypto pump. Discovering new trends in crypto always feels so futuristic! So we now have decentralized exchanges with insane liquidity and some of them like UniSwap are becoming even more popular than traditional crypto exchanges.
Just thinking this scenario objectively would blow your mind! Let us walk through it together.
First, we have not just one but many currencies that are not issued by any central banks. They get their value not from a sovereign guarantee but precisely due to lack of it and the perceived lack of interference of these sovereign states. Their usefulness and their price variation is purely determined by the market they serve. Consequently, many cryptocurrencies develop to serve various purposes and some develop just as a means of capitalizing on the trend and due to sheer ease with which these currencies/tokens could be created on the Ethereum chain as ERC-20 tokens (recall dot-com bubble).
Most of them never see any adoption. Some of them see some adoption which dies down rapidly. Only few are able to make any dent in the crypto space. However, only few maintain and consolidate their position. Rest slowly slip into the abyss of loneliness. Slowly, we have an ICO craze which develops into a mania as the 2017 year ends. The ICO craze gives us some technologies which slowly develop and get their due recognition in the summer of 2020. Others boom and burst as this crypto wave reveals itself.
A question that needs to be asked is- Are we currently riding the deFi mania and will all come down like the last time? . Only time will tell. But, as a principle, anything that goes up eventually comes down..
Advances in smart contracts technology leads to other innovations in the system like decentralized exchanges. Decentralized stable coins like tether (USDT) give way to decentralized stable coins Dai, USDC, HBD and many many others. Decentralized marketplaces emerge that make lending and borrowing of crypto assets possible. Prominent among them would be marketplaces like Aave, Maker, Compound, UniSwap( for comprehensive list checkout DeFi Pulse.
Yield farming becomes a new trend and various cryptocurrencies develop in order to capitalize on this trend. Shitcoins with nothing to show gain and loose millions in days.
Short sellers tried and failed to reap anything and the DeFi movement refused to die down. New initiatives continue like Leofinance spreading financial education and incentivizing knowledge creation and community engagement.
