The DeFi Renaissance - The Daily Gwei #459
Is DeFi finally making a comeback?
DeFi has been in a weird place over the last 18 or so months as it has been coming off of the massive high it had during DeFi summer in 2020 (longest hangover ever, am I right?). I would argue that DeFi is still going through the trough of disillusionment phase of the Gartner Hype Cycle with some DeFi projects now beginning their ascent up the slope of enlightenment - are we about to see a “DeFi renaissance”?
Even though the last 18 months have been rough for DeFi token prices and general DeFi adoption, the building has kept on chugging along at a solid pace and some of the innovations have been really interesting (such as protocol owned liquidity and the various ways projects are tackling cross-chain/cross-layer 2 things). On top of this, many projects are now onto their v2 or v3 releases with plenty of roadmap items left to execute on - and thankfully a lot of the total rubbish has been completely flushed out.
Speaking of rubbish, the “DeFi 2.0” mania we saw play out over the last few months was the perfect example of that. So many of the DeFi 2.0 projects were either just money games or straight up ponzis - and most of them inevitably crashed just like people thought they would. Now, I’m not saying that money games or even ponzis are necessarily a bad thing (as long as people know what they are getting into), but branding it as DeFi 2.0 as if they bring some new innovations to DeFi was misleading at best and outright scammy at worst.
So, are we going to see a DeFi renaissance in the coming months or will DeFi continue to be in the slumps? Well, the timing is hard to pinpoint, but I do believe that the best projects in DeFi will start to shine through once again very soon due to their awesome innovations, their deployments to the more scalable layer 2 networks, their focus on building things users actually want and better tokenomics across the board so that the tokens actually capture the value generated by the respective protocols.
In saying all of this, I could be completely wrong and off-base here, and that’s okay - I’m just making an educated bet on DeFi finally coming back into the spotlight. The odds are a little stacked against DeFi compared to 2020 since it now has to compete for mindshare with things like NFTs, but I think that this is a blessing as it’ll allow the more legitimate projects to shine through and hopefully thrive.
Have a great day everyone,
Anthony Sassano
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All information presented above is for educational purposes only and should not be taken as investment advice.