Do you think the high return from DeFi lending is a bubble or a must for DeFi products?
2020-06-23 08:58:00 2078 Participants
Vitalik said the current high-interest rate in DeFi is either temporary arbitrage opportunities or come with unstated risk attached. And decentralized finance should not be about optimizing yield.
The launch of $COMP token has caused a dramatic increase of Coumpond’s volume. The price of $COMP also went up to $360+ from $60. However, as more funds are transferred into Compound, the interest yield is getting lower. Do you think the high return from DeFi lending is a bubble or a must for DeFi products?
My answer to this problem would be: Neither. the high returns in the DeFi market is not a bubble, but the result of a fundamental relationship between supply and demand. However, in the long-term, the current elevated returns are likely to decrease in the long-run as the market matures and more capital flows in the DeFi market. On the other hand, the current returns may remain elevated as the demand for DeFi services outgrows the capital inflow.
Also, my thoughts on JUST within the DeFi: the DeFi market is liberating the society from conventional financial tools and the decentralized stablecoin JUST is an integral part of the DeFi ecosystem.
DeFi definitely has a lot of bubbles at the moment, But it's all about getting "Hype" in crypto.
Among our investment group we called the $COMP mining "Yield farming". It is very useful because as the price goes up, a lot of people started staking USDT or BAT in the Compound App. Thus the volume gets so high. And when the price goes higher, everyone gets crazy. CeFi products like Nexo also put $60M in Compound for interest, you know how crazy it is.
But anyway it is good because the hype around Compound has brought DeFi to a new level as there are so many news around it. It's good progress to dapps.
DeFi is all about secure and transparent to me. That is important
In my opinion as a user, I want to have a high yield and definitely high yield will attract users move funds from one DeFi to another. Or move money from bank/centralized platform to DeFi. All of these are because of the high yield. (And relatively low risk maybe)
But I am still worried about any hacking problem. Seeing the Lendf.me hacked case.
Comp rise and felt, both token price and the yield rate
Return and risk. Higher return, higher risk. It is a must for a DeFi to attract users. But when the risk exploded, users will lose. They need to accept this.