Topic: What can be the reasons for this exponential growth of #DeFi? (Read 264 times)

I would say it was the hype. A lot of people on every platform is DeFi this and Defi that. Cant be helped that a lot of people would be drawn to check it out.

The hype should be the main reason. Even the non-defi projects have already started to release their defi to the market to get the hype. People were also investing in the defi caused by when they were getting the right project and they can get a very huge profit too from there. it's all about the hype

Other than hype, we know that DeFi is somehow good and useful that makes people notice it first. Unlike in ICO some DeFi projects were improved and really doing their best to be noticed and serves its purpose like Chainlink who's been performing well even before these hype. The purpose of DeFi is to make a better financial system and many projects there are fresh in ideas, only due to its popularity this time that some projects appears with no real usage and just riding the hype like Yam.

New idea so definitely got hyped when chain-link entered into the market which resulted into lot of projects with the same decentralized platform idea.But the growth is overhype for sure so at some time it will get hit too hard so investors are making this quick opportunity to make quick profits.

Short answers because "Hype" same case with ICO 2017, Doge Pump TikTok and many more. The positive side hype also can bring a lot of profits but the negative site is too risky, popular example is YAM project. But for me, I will stay away from any hype situation. But we can't say that all defi have increased due to hype, many projects based on defi are good

It is probably the fact that some of them make a ton of money and the numbers are close to 2 billion dollars right now, so a lot of them got super amount of attention just because of the buzzword defi since few of them got people rich, the other ones looked like they might as well. However people are forgetting that just because one was good doesn't mean all others are good neither.

Look at bitcoin, it is the biggest coin out there right? There is absolutely no other coin that is bigger, yet there are crypto coins who are proof of work and have similar stuff right? Yet they are very low. People will forget about all these defi as well when they realize it is not all defi that is great, it is just some of them are good and most of them are horrible and the hype dies after that.

The reason is that they are the new kid on the block meaning lots of speculation and hype can be generated around this concept so that naturally will interest traders that want to profit from volatility. Until there are exact usage and real world value, expect them to pump and dump as much as people are willing to pay for them. DeFi meme coins are the plague this year.

It is just a new trend, personally i do not find anything special in defi till now. Yes, it can be good but only when masses will be able to access them and also defi projects would be able to offer all banking facilities just like real, physical banks offer, till then defi is just a new attractive selling point and nothing else.

Scams had already infiltrated the #defi ecosystems and it will be an extension of what happened back in 2017. At this junction, investors should be more careful than before because the game changer's has entered into the market. We saw what happened to YAM token, this should be recognize as an example of what's to come into the system in future. Am very much careful not to get into the hype to that extent I loss my sense of belonging. #defi is an over hype ecosystem and care must be taken not to loss one assets to them.

In my opinion, this is a new financing system, and this system has succeeded in stablecoins, loans, and the main elements and has great privacy advantages. Therefore, this attracts early investors in abundance, like what happened in any new financing or investment system that was established before and whenever an idea or system develops, this system grows in its early years, collects huge investments and gives great returns to investors, and then it comes back naturally after the hype ends.

ICOs were enabled by Ethereum's ERC-20 taken standard as well as the ability to implement contracts for depositing and paying back tokens. They gathered money in the name of shiny ideas, of which the majority turned out to be over-promised. Most devs were not able to implement anything remotely useful and this just led to easy exit scams.
DeFi has the same nature but a much more focussed but obscure one. Earlier, you could just get to the gist of the idea by reading up a little. DeFi projects take this complexity to another level. The entry level is also pretty high. DeFi already has a lot of projects underway and it needs big money for significant profits. DeFi essentially lets you offer your holdings to the platform which can then use it as liquidity for lending to others. Traders borrow this and the liquidity providers get part of profits. Its easy to say that the higher amount of "funds" you have to lock up, better chances you have to earn.

DeFi will also end up being as good as its devs. High quality devs means genuine products (what they are in DeFi would be a book in itself). Yet, the profits will have already been made. Normies don't really have much of a chance till the scam ICO devs turn their attention to these and the next cycle of hyper-speculative tokens starts.

Story of ICOs in 2017 is repeating again with the new ideal called defi, it is getting overhyped initially by the news media now every investors are running towards it even by selling the ethereum and bitcoin to invest on such a shit again,I don't know how many lessons they want to learn to stop falling for such kind of hype traps.

This is true. Sometime some project renounced as defi could get more than 3x than their base price. Still the market are interested totally huge hype for a none product projects. Same things with the ICO of 2017, maybe more people will get complained later on.

Projects are overblown, I know that many different DEFI projects existed before. LEND has dropped about 12 times as its capitalization returns to around $ 8 million recently LEND's capitalization has increased by 100 times. New DEFI cryptocurrencies have responded to the bullish wave and FOMO is here.

These days DeFi projects are on full peak and as we know some defi coins/tokens have been very profitable in the past few weeks that's why mostly people are getting involve in defi projects and the numbers are increasing day by day so I think the mass inclusion of people can be the main reason of this exponential growth of defi.

The Defi concept, similar to ICOs, is not a scam, however its implemenation with the backing of speculative assets that are very volatile in nature might cause it to implode during bear markets. You know how the cryptospace bear markets are hehehe. It is a dump of more than 10% on the first day and continues to lose up to 90% of value in most cases.

the product is there but it is obviously over hyped. one projects got a lot of user base and their token rise like crazy. other projects try to do the same thing and traders are using this to keep hyping it so they got more money from retail traders. it's definitely 2017.

Hypes don't just developed out of nothing, it's the product of DeFi that built the hype and the success keeps spreading to newbies too, it's same thing that got to people in 2017, this is so normal isn't it?

The same reason that was during the ico period, lots of hype, crypto is all about creating huge hype to get peoples attention, defi project was able to create that huge hype to get the attention of crypto lovers and investors, look at what compound did, then link, band, dia and some other defi projects, now everyone is looking for the next defi project to make easy profit, soon it will end like ico and ieo when the next crowdfunding will appear.

Despite a lot of skepticism about DeFi projects, I see them as a good prospect, as they offer real financial services to participants in this market. The emergence of various civil transactions on blockchain technology and using smart contracts solves issues that were previously in the hands of banks. Now DeFi began to really compete with banks, because loan, credit, and deposit agreements have ceased to be the privilege of banks.

@Kemarit. Agreed! You tell them hehehe. However, it appears no one cares about the lessons of the ICO boom of 2017.

Also this article. Defi is described as a zero sum game. If there is someone profiting, there is someone else paying. Similar to a ponzi?



Ethereum’s yield farming space is reaching such a fever pitch that some of its biggest proponents are asserting that they’re skeptical of the longevity of this fad.

“Weeb Mcgee,” a developer whose real name is John Lim, recently asserted that he thinks the ongoing “yield farming meta” is “an unsustainable zero sum game.” Mcgee is best known for launching yieldfarming.info, a site that provides timely data on DeFi protocols.

“Yep. I’m on the record saying yield farming meta is an unsustainable zero sum game. The big winners here are protocols benefitting by capturing permanent value via inflated prices / sudden movements of funds,” Mcgee said.

Mcgee isn’t the only proponent of Ethereum to have recently asserted that the yield farming trend is getting a bit out of hand.

Source https://cryptoslate.com/defi-yield-farming-is-an-unsustainable-zero-sum-game-ethereum-innovator/

It's simply FOMO, people doesn't want to miss the hype train so they are jumping as early as today.

And I'm sure those who learn from this mistakes during the ICO boom of 2017. That's why experience traders and investors wanted to get in the beginning to squeeze as much profit as they can in the new Defi hype.

Hype and high chance of profitability.

When investors sees a new trend of investment, they'll come get in as early as they can while it's very much profitable. The hype isn't yet gone so there seem to be an unstoppable growth rate for DeFi.

But the same as ICOs before, it's a matter of time that they'll start to get low due to scams and lowering in demand.

That for sure will truly gets us to know what are the real value of this DeFi, right now I think those are overvalued. It's get listed on exchanges one after the other to get more hyped, though that a bad thing if you want to earn quick bucks but in the end if you are not paying attention this thing will gonna get you rekt.

The exponential growth of defi is nothing but simply the result of the business model, it is basic human nature to look for passive income, extra/second income or additional residual revenue streams. All these things are what make defi attractive and a lot of crypto investor are lured to stake their holdings in defi in expectation of good returns.

 Probably hype, there is nothing that comes to my mind other than hype, just because there have been some stuff that made money to some people, everyone thinks they will make a ton of money once again. You have to realize that there haven't been too many things that made people any profit in a long time, people all have been looking for something that would make them money and there has been zero of them around, yet after a while people saw this defi thing that started to make some money to some people and hoped that the thing they were looking for could be defi so they all jumped into that.

 All of this hype is dangerous obviously, one day this hype will die down and the last one standing will hold a huge bag, I hope that people are ready to get in but also ready to get out when needed as well so they are not the ones holding the bag.

The thing coming into my mind only.

Less supply and so many tokens got locked could be same as a lending platform, but the honest the main service they want to offer always giving some percentage profit from the stake/lending they are offering the other service giving some loans with cryptocurrency as collateral. At least some they are not giving un ridiculous interest to their customer or not paying them with USD.

Yeah its probably the same people that gambling with these defi projects. Once they are through, transfer again to a newer one. I become interested into defi and exploring how these things are done and the profits they are ripping are too big and sometime only for a short period of time. I like to think that many projects are just luring all these traders to their bait. But once you already acknowledge the process then boom. Earning will become an easy play.

There were a bit of genuine interest on defi as they solve as well as automate a broad business that has been already established by central agencies. But the current increase in price of defi tokens are unnatural and unsustainable. I don't know the exact point but when compound finance issued their own token, the prices of every defi coins started to increase without taking in consideration of increase in transaction volume and use of these defi. It's a pure hype and a bubble which is going to burst soon.

I have been saying this for many times now in many different threads,,, I do not see any good news when I read all the Defi things. To me this is just like gambling dapps on Ethereum,,, more sophisticated but the same people playing with money all around.

There are already a lot of scammers and I think that some projects that have already entered the market are also scammers. They hide very well and it is difficult to understand that they want to steal your money, but if we will be careful, we will not lose money.

From my own point view, 60% people investing on defi don't know what they are all about, just to make few bucks of profit and move into another, only few does stay for the real Defi.
Yearn Finance was one of the crazy tokens that made immense gain this month because of its little supply, hype and nothing more.
Lets hope the true decentralised finance continues and real case used scenario.

DeFi growth is the result of demand, most of the tokens of the defi based projects offer high returns to lend or stake the tokens on their platform that is simply the reason why people are purchasing their tokens more and more and this is driving the price exponentially.

I guess, "easy money" pouring into something that is probably not well tested/reviewed for true decentralization and safety.  Decentralization matters alot here because  it's called "Decentralized" Finance, so why build centralized things on Decentralized Finance (DeFi)?  The centralized ones could simply use the crypto-based CeFi (to avoid the confusion) and maybe comeback on Defi once they have become properly decentralized and safe.
I think it'll be unfortunate if people are not asked to put in what they can afford to lose, as such projects develop and go through testing/beta phase.
 It'll be tolerable though if the tokens are gotten for free... and something really decentralized, good, useful and safe/secure is being built. The opposite of this coupled with staking could easily drive price up on the DeFi ecosystem in similar manner yam price rose up.
And I think if you make the money/token a bit harder to have (people get them through hardwork on the platform & not given unnecessarily for free), and without unnecessary staking/coin-lockup, price won't be skyrocketing this early. This doesn't mean staking is not good... The right staking should be encouraged or used.

Exactly it's "hype". Well, I'd say we are on the brink of being crowded on the defi space and sooner or later we'll see scams involving defi. Scammers are looking now into this industry just like what happen way back 2017 with the crowded ICO on place. Just my opinion but my hunch tells me it will be the same as to this defi.

The main reason should be hype. People were also starting to see the crypto currency based on the product and most of defi projects were developing the product and this is what already searched by so many investors too.

Have a look at the Digital Asset Market Performance of last week.  What can be the reasons for this exponential growth of #DeFi?




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