Vitalik Buterin criticized DeFi projects for huge emission

Ethereum co-founder Vitalik Buterin again decided to warn investors against excessive optimismrelative to the decentralized finance (DeFi) sector, comparing the economics of profitable farming tokens to the printing of money by the Federal Reserve.

Profitable farming - providing liquidity to generate interest in the form of tokens, conquered the crypto community and sparked a DeFi boom.

In this regard, Buterin stressed the aggressiveinflation of the supply of many governance tokens, stating that this puts downward pressure on the prices of "coins that are printed non-stop to pay liquidity providers."

«Seriously, a huge number of coins,which must be printed non-stop to pay the liquidity providers in these yield farming regimes 50-100% per year makes the major national central banks look like they are all run by Ron Paul».

Yield farming at this point is just a giant Ponzi scheme

Someone forks a well-established project, makes minimal changes, gives it a funny name

Some insiders farm a large amount of coins, shill it on social media, and dump it on naive investors at massively inflated prices

- Larry | larrypc.eth (@Larrypcdotcom) August 31, 2020

Buterin isn't the only one paying attention to the inflationary aspects of the DeFi sector, Twitter user Larrypc likened lucrative farming to a "giant Ponzi scheme" (financial pyramid).

However, there are also optimistic investors, for example, David Lach:

«If you are considering these releasedcoins as new cryptocurrencies (eg BTC, ETH, etc.), then yes, this is crazy. But if you look at it as capital in new crypto startups/cash flow generating projects, it's not that crazy. There will always be new startups with real potential in the crypto space.

To this Buterin objected that he did not see “a probableways ”for many projects to generate cash flow, highlighting the need for paid applications to support the project in the long term:

«So far the only strategy for obtaininglong term fees I see is some weird financial attack to capture liquidity and steal Uniswap's network effect. I'm pessimistic about this strategy.

The lucrative farming frenzy also causedconcerns about Ethereum's scalability as the execution of the complex smart contracts that underlie the transactions of many DeFi projects result in three-digit fees for performing basic operations.

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