DeFi is in hype, but for a good reason
DeFi is in such a big hype right now. But is it just a bubble? As far as I know, it is not. Because it is already used a lot!
DeFi = decentralized finances
Some people are comparing DeFi to the ICO bubble of 2017. And I agree that this can bring big attention to crypto. With the price bubble of course. Put on the side the fact, that all the bubbles tend to pop one day or another. Such as the ICO 2017 bubble or the housing bubble of 2008. Yes, one should be careful about all the bubbles.
What makes me sure that it is "real"? That the hype is not just a bubble that will pop soon? (well, it might, I never been 100% right...). Just consider the amount locked in DeFi products. 7 billion USD!
Source: DeFiPulse.com
Why am I interested in DeFi?
Decentralized finances are the real usecase of cryptocurrencies. And you can think of it as the distribution of the traditional banking business. Lending and borrowing. With higher rates than the ordinary person can get in a bank. And without any restriction - you just need to put there your collateral and it works for you. Or you lend your crypto and get amazing rewards.
There are surely many risks, and this is why this space is so unmatured yet. But those are not to talk about at this moment. Maybe in some future posts.
Here are the positives. When you plan what you would like to do with your finances, you could definitely profit from DeFi. Do you have some fiat or stablecoins, which you will not use for a while? Lend it for 12,14 % at Nuo! Did you get some BAT as a reward from your Brave Browser? Put it on 3,84% interest on Aave! Do you have Bitcoin and you don't want to trade it? Use Bitfinex and get 6.07% p.a. interest as a return!
Source: DefiRate.com/lend
Do you know CoinMarketCap? Of course, you do. But do you know DeFiMarketCap for browsing DeFi projects? Check it out!
Source: DeFiMarketCap.io
On DeFiMarketCap you can find, that the project with most market cap is EthLend Token on Aave, second place takes Compound with its Compound Dai. That might show you that Aave and Compound are the most trustworthy. And so maybe the one with fewer risks. But surely, the DeFi space is so new and there are serious potential issues!
Conclusion
Be very cautious while using DeFi. You are handling your finances. You can lose your password or mnemonic passphrase and you lost your funds forever. You can use some service with fewer experiences and those funds might be attacked by some malicious player. Where is money, there are hackers and cheaters, get this in your mind.
But besides those threads, you can start using DeFi in your way. If you have mid-term or long-term assets, you want to lend, you can now do it with better interest rates than any bank can offer to you. Yes, the risks are included.
If you are going to try the DeFi Yield farming, you can get very juicy profits. But the risks are much higher, so be careful doing that. I am not encouraging you to do DeFi Yield farming, I just wanted to mention that there is the possibility to do so.
In all ways, do the right decisions that fit your risk-level and use only funds you are satisfied with if anything wrong happens with them. I would never use those kinds of transactions borrowed money.
Final word:
Be your own financial advisor! Educate yourself! Try to do the best for your portfolio and for yourself! Learn what is DeFi and how you can use it for your good and avoid mistakes.
Yes absolutely, DeFi is arguably the next best wave in the crypto sphere. It is constantly growing and most importantly it is catering to the use-case of crypto more like a utility coin. Nonetheless the crypto hodlers also can leverage DeFi to their advantage.
DeFi might just be the type of empowerment that early computer hobbyists envisioned when working in their garages back in the 80s and 90s.
excellent information, did not know about the defimarketcap, It seems to me a genius and what is proposed is very attractive, yes I hope it matures enough to risk participating in it.
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