Is DeFi a Broken Thing Of The Past?

DeFi only came to light for the masses back in 2020 when the bull market started to take off. Before that DeFi was actully around for nearly a year but the amount of traction and popularity it goes was very minimal.

Once the bull market kicked in DeFi became a hot spot but in the nearly 3 trillion dollar market cap it only accounts for roughly 165 billion a small fraction of the total market cap for crypto. Mid 2022 saw it fall to just 50 billion while today it only sits at 40 billion in total value locked or TVL.

This begs the question is defi dead or dying or is something else currently at play? Let's take a look...

Constant Attacks and Exploits

One of the biggest things keeping defi adoption from happening is the constant multi million dollar hacks that keep happening. These hacks are not only damaging to the platform but to the overall image of DeFi and a massive risk factor.

2020 was wild for defi platforms where sprining up out of the woodwork offering up higher and higher APRs to try and attract more capital to their platform in the ever increasing world of DeFi. There were even flat out rug pulls of people dumping money on to DeFi platforms and then a few weeks later the person or persons behind it cutting and running with all of those tokens.

What came of that is now a select few defi platforms that are currently still running and still producing some rewards and activity.

The Vision Of DeFi

DeFi brings a lot to the table. It offers up liquidity which keeps things moving along with low fees that also help to keep things flowing. These fees are returned back to the native token and also the liquidity providers. This cuts out the middle man and allows you to invest like a bank would allowing you to take on the risks you want while collecting much higher APRs that you would have otherwise.

This vision of how defi works and all of its benefits is a good one however it is currently plagued by big issues and most likely always will be just like we see within other crypto sectors.

Currently it's based on two extreams. The DeFi side that wants to run everything via crypto and votes with that money and held tokens and the traditional finance world in where the FED and SEC tell you what you're allowed to do and invest in with the money you've earned.

Most likely when things settle and the next bull run takes off we will be somewhere in the middle. We will also have tokenized everything in which other tokens, assets, NFTs, land, houses, stocks and more will all be blended together on the DeFi platform (which does mean regulation and oversight) this new tokenized economy however is most likely still a few years off but if the bull run kicks in we often see advancements and pushes happen at a much faster rate.

So yes defi is slow at the moment but it's still working on figuring out its place and how it will operate. It will always be a thing.

Posted Using LeoFinance Alpha