What are the prospects for DeFi projects and profitable farming?

The field of decentralized finance (DeFi) has become the main trend of 2020 in the cryptocurrency market.Based on Ethereum andother blockchain platforms thousands ofapplications for trading digital assets and issuing crypto loans. Services for "profitable farming" received special attention, which offer thousands of percent of annual profitability for opening a deposit, but sometimes break down on the first day of launch, writes RBC Crypto.

A key driver of the DeFi hype wasinsane growth in the rate of tokens of these projects. For example, the flagship of the DeFi market, the token of the Yearn Finance (YFI) platform, was released on July 18 and has risen in price by about 100,000% since then. Other coins such as UMA, TRADE, RING showed less growth in value, but still helped early investors to increase their capital tens and hundreds of times.

DeFi Tokens Are an “Investment Opportunitydecades,” said former product manager of the analytics company Messari Qiao Wang on his Twitter account. He believes that not taking advantage of this chance is like not buying Bitcoin in 2013 or Ethereum in 2015. But Wang stressed that there is a lot of "garbage" in the industry. It is extremely important to choose projects that develop a real product and have a fundamental basis for growth.

Founder of the stable cryptocurrency platformSTASIS Grigory Klumov is also optimistic about the prospects for the DeFi market. He believes that now the sector of decentralized finance is in its infancy, like the Internet or other revolutionary technologies used to be. However, more and more players are appearing in the industry, and it is difficult to predict which of them will succeed.

“Indeed, the DeFi space is an investmentpossibility of a decade. But just like with the Internet 30 years ago, as with video services 20 years ago, as with mobile phones 15 years ago - there will be a lot of participants and very few winners. It's hard to say now who will be the next Google or Facebook. ", - shared Klumov

The leader shares similar viewsdata center Six Nines Sergey Troshin. He believes the DeFi sector can be called the investment opportunity of the decade. But the moment for its implementation is probably already missed. However, there are still opportunities for speculators. For example, the YFI token rate in September fell from $ 38,000 below $ 20,000, but now rose to a new all-time high of $ 42,000.

Troshin noted that comparing the purchaseDeFi tokens with an investment in BTC or ETH are not entirely correct. The reason is the number of players. In 2013-2015, there were several cryptocurrencies, and it was enough to choose the leaders. And there are already hundreds of DeFi tokens, and most of them are likely to depreciate.

“At the dawn of the cryptocurrency market, everything was simpler -there was only bitcoin. You either buy it if you believe or not. DeFi tokens are more difficult because they provide two degrees of freedom. The first degree is to understand whether you believe in this industry or not, the second is to choose the right tokens. As soon as an investor begins to diversify risks and choose tokens for his portfolio, things start to look not as tempting as it was in 2013, since 80% of these tokens will be zeroed out. However, there are those tokens that will shoot like bitcoin, but finding them is not an easy task "- Troshin explained.

He added that the growth of the DeFi sphere may be hamperedfinancial regulators. In 2017, a bubble in the crypto market was considered a threat and institutional players were released into it to cool the hype. Duplication of the financial market by DeFi projects is unlikely to pass by regulators. At the moment, the DeFi sector has passed the initial phase of relatively quiet development, while increased attention always indicates high risks.

The DeFi market now looks grossly overvalued. Some DeFi tokens that appeared 1-2 months ago have already appeared in the top of the cryptocurrency rating in terms of capitalization. However, not everyone has an application or a finished product. For example, the Polkadot coin, which does not yet have a fully operational blockchain, is now ranked 7th in this ranking.

Despite the overvaluation of the market, it is important to rememberthat greed has no boundaries, emphasized the head of the data analysis department of CEX.IO Broker Yuri Mazur. 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 subsides, most likely, users will start selling DeFi assets, taking profits. This will be the moment of truth for the decentralized finance market.

Mazur clarified that the most reasonable thing would beinvesting in DeFi no more than 10-15% of capital. The crypto market remains a place with high risks, and DeFi tokens on it are the third echelon, which cannot be the main core of the investment in principle. But at the same time, in terms of profitability, even 10-15% in the portfolio can provide an increase of more than 100% to the total investment and balance the volatility of investments in BTC or ETH, which currently cannot “boast” a price increase of 1000%.

Investing in the DeFi sector is very risky.strategy. The price of DeFi tokens is extremely exciting and can not only grow significantly every day, but also fall. For example, on September 2-3, the rate of the Hotdog coin first soared from $5 to $6200, and then rapidly fell to almost a cent.

On top of that in the DeFi space, perhapsthe bubble is inflated. This is the opinion of Messari founder Ryan Selkis. In his Twitter account, he called the decentralized finance market filled with pyramid schemes and urged people to prepare for its collapse.

A mass withdrawal was observed in China in September.cryptocurrencies from exchanges. Users are withdrawing funds from trading platforms, deleting accounts and encouraging others to do the same. One reason is the growing popularity of the DeFi space. Investors are transferring capital to DeFi platforms for “yield farming” and to abandon centralized platforms due to distrust in them.

</p>

5
/
5
(
1

voice
)