{"id":428396,"date":"2020-06-24T21:00:19","date_gmt":"2020-06-24T21:00:19","guid":{"rendered":"https:\/\/wncen.com\/?p=428396"},"modified":"2020-07-01T14:02:20","modified_gmt":"2020-07-01T14:02:20","slug":"investor-has-concerns-for-ethereum-defi","status":"publish","type":"post","link":"https:\/\/wncen.com\/news\/ethereum\/investor-has-concerns-for-ethereum-defi\/","title":{"rendered":"A DCG Executive Has an Unexpected Concern for Ethereum’s DeFi"},"content":{"rendered":"
The Ethereum-based DeFi sector has been consuming the bandwidth of the crypto sphere in recent times, being at the forefront of most conversations due to its exploding popularity.<\/p>\n
One new trend dubbed \u201cyield farming\u201d has also garnered significant attention from investors, as it has allowed users to see massive yields on their capital \u2013 sometimes being as large as 200% APR or higher.<\/p>\n
Although there are aspects of the decentralized finance ecosystem that seem promising, one executive at major crypto investment fund is pointing to one flaw of the emerging sector that could hamper its long-term growth and sustainability.<\/p>\n
2019 was a great year for Ethereum-based DeFi<\/a>, with many protocols, platforms, and sector-related tokens seeing tremendous growth throughout the year.<\/p>\n This trend continued throughout 2020, with the total value locked within collateralized loans breaking over $1 billion earlier this year before plunging in mid-March.<\/p>\n The market-wide meltdown seen on March 12th caused many collateralized loans to be liquidated, which caused the dollar-value of tokens locked within plunging from its previous highs of $1.25 billion to lows of $520 billion in just a few days.<\/p>\n From this point, this metric recovered alongside the crypto market, but started going parabolic last week when it saw a sudden jump up to fresh all-time highs of $1.6 billion.<\/p>\n <\/p>\n Most of this growth came about due to the recent launch of Compound, which has given rise to the \u201cyield farming\u201d trend in which users leverage Ethereum-based tokens<\/a> to collect incentives that can, in some instances, be as large as 200% annually.<\/p>\n Many investors believe that all this bodes well for Ethereum, as it has directed a significant amount of attention and new users to the cryptocurrency. Its price, however, has not yet reflected this.<\/p>\n Larry Sukernik, an Investment Associate at the Digital Currency Group (DCG), recently explained<\/a> that a good portion of the Ethereum-based DeFi ecosystem is \u201cmassively unusable\u201d despite it being created by \u201cvery high IQ\u201d individuals.<\/p>\n \u201cA very high IQ can be a headwind to building massively successful products. You get people with a big brains that need to be put to work. And when they\u2019re put to work, the result is often a complex, brilliant, but massively unusable product. Lots of that in DeFi now,\u201d he explained.<\/p><\/blockquote>\nDCG Investor: Lots of \u201cMassively Unusable\u201d Products in Ethereum-Based DeFi Ecosystem<\/strong><\/h2>\n