Ethereum co-founder Vitaly Buterin once again recalled that the DeFi market can carry serious risks for investors.
DeFi is no different from the Fed
Vitaly Buterin once again addressed all DeFi market participants on his Twitter. In the post, he compared the decentralized finance sector to the US Reserve System, which prints dollars non-stop in hopes of tackling the coronavirus crisis. In particular, Buterin wrote:
“Seriously, the sheer volume of coins that need to be printed nonstop to pay liquidity providers in these modes of growing 50-100% yields makes major national central banks look like they are all run by Ron Paul”.
Thus, Buterin is trying to warn investors against naive optimism. Indeed, now many users are investing huge amounts of money in projects related to decentralized finance, expecting super profits. However, Buterin himself points out that such activity will ultimately generate aggressive inflation, and the project founders are simply obliged to issue tokens to provide liquidity.
The capitalization of the decentralized finance market exceeded $15 billion.
DeFi tokens are growing under the pressure of investors
The crypto hysteria surrounding the decentralized finance market is pushing the price of major DeFi tokens up. For example, today the price of the YFI token is over $33,000, and the YFII token is trading around $3400.
The Aave (LEND) project remains the industry leader. Now $ 1.71 billion is blocked in it. It is followed by MakerDAO with $1.43 billion, Balancer ($1.36 billion), Curve Finance ($1.26 billion), yearn.finance ($ 953.6 million) and Synthetix ($871 million).
However, experts are sure that such a rapid growth does not promise anything good for the investors themselves.
The head of marketing at Messari, Connor Dempsey, believes that the rise in the price of the YFI token is due to an extremely fair launch of the project without hidden distributions of the asset between the developers and has no objective reason for the growth.
“Nevertheless, YFI is still a risky asset. Developer André Cronier wrote directly on Twitter “I’m testing in production”, which clearly demonstrates the lack of project auditing, ”wrote Dempsey.
Many other projects like Ham.Finance, Based.Money and Spaghetti Money are special in their own way, however, unlike yEarn Finance, they do not create any economic value other than a hybrid token for project management.