DeFi projects have been flying high since the start of the year, from Kyber Network to Aave, to Compound and Balancer, among many other platforms. In fact, DeFi has grown so high that many crypto pundits fear that this could be another bubble.
It’s no surprise that not everybody agrees on crypto town, which is obviously expected in decentralized communities. This is true even for individuals supporting the same cause. Take Blockstream CEO Adam Back and Bitcoin evangelist Andreas Antonopoulos, for instance.
Both fully support Bitcoin Core but have different views on DeFi.
Is Yield Farming A Scam
Perhaps the most popular application in DeFi has been yield farming — the act of leveraging decentralized platforms and products to create high returns. Adam Back had called it scam 3.0 due to the overly high interest rates (usually over 100%).
Andreas, on the other hand, sees yield farming as one of the few ways to create money from your Bitcoin funds without letting other people hold them. However, he still believes this investment scheme incurs high risks due to the high volatility of cryptocurrencies, as well as the possibility of bugs in smart contracts.
The most bullish analysis for DeFi has been explained by crypto investor and analyst Andrew Kang.
Why Asian Markets Could Make DeFi Explode
According to Kang, we are still in the very early stages of DeFi adoption. And frankly, the same is true for development. The various hacks have proven without a doubt that these systems need better security.
Kang explains in the thread that “only a few dozen people” truly understand how DeFi apps work and that it would take more time for everybody to truly see its potential. Additionally, DeFi does not have many users yet, which means it has more room for growth.
Although usage has tripled in the last couple of weeks, we’re still at 6,000 daily active users, which is still dwarfed by CeFi (centralized finance) usage.
And most of the DeFi users are either whales or hardcore crypto enthusiasts, not regular people. If you compare this with the ICO era, everyone and their grandmother were investing in ICOs.
Speaking of the ICO era, it was Asian money that drove many altcoins to the moon during those months. But Asian money “has only barely been activated” in DeFi, according to Kang.
He believes that although some Asian markets like Singapore have “crushed it”, by and large, Asia still has enormous pots of gold waiting to pump DeFi once the FOMO kicks in. China, in particular, has “completely missed” out on DeFi gains due to their skepticism.
As far as Kang’s analysis goes, we are still in the early stages and have a lot of room for growth.
When will Chinese investors finally take the leap and participate in the DeFi movement? Chinese websites seem to be heavily reporting DeFi as of late. The FOMO might have already kicked in.