September 29, 2020

CEX.IO company blog | DeFi tokens and what the future holds for them

DeFi (decentralized finance) has become the main trend of 2020 in the cryptocurrency market. Almost every day more and more new projects appearand apps for trading DeFi tokens. Yuri Mazur, head of data analysis department at CEX.IO Broker, expressed his opinion about the current hype and what the market expects in the future.

If we talk about DeFi tokens, then, from the point of viewopportunities, they are more likely to be compared with ICO tokens than with such a global project as bitcoin. The fact that we see a DeFi boom suggests that the creators of cryptocurrencies, having gone beyond the functionality of traditional payment systems, are looking for a semantic wrapper for a digital asset. Since the consumer, cryptocurrency is important not as money, but as an opportunity.

From an investor's point of view, the crypto market remainsa place with high risks. If we draw an analogy with the stock market, DeFi tokens are the third echelon, which cannot be the main investment core in principle. On the other hand, in terms of profitability, even 10-15% in a portfolio can provide more than 100% growth in total investments and balance the volatility of investments in Bitcoin or Ethereum, which cannot boast of 1000% growth.

As for the overvalued market - it is importantremember that greed has no boundaries. With governments printing and continuing to print massive amounts of fiat money, investors are more aggressively going into alternative assets, protecting savings from looming deferred inflation.

As soon as the excitement around the additional issue of fiatcurrencies will subside, most likely, investors will begin to withdraw from DeFi tokens, fixing profits. This will be the moment of truth for the decentralized finance market. Therefore, the most reasonable at the moment would be to invest in DeFi no more than 10-15% of your capital.

Read the full material here.

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