Linda makes a very good point below – it used to be that people would debate if decentralized exchanges or even DeFi in general would succeed and many believed that it wouldn’t. It seems that we’ve moved passed those debates and now we just debate over which model is better – I believe this is a critical turning point for DeFi.
It’s pretty neat now that decentralized exchanges have had so much volume that a lot of the conversation went from debating centralized vs decentralized exchanges to debating what is/will be the more successful DEX model.
October 15th 2020
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If you’re relatively new to the crypto space then you probably feel like DeFi has always been a sure thing and might think to yourself “how could anyone ever doubt this?” Well my friends, people did doubt it and many of them obviously still do (although it’s much harder to doubt it these days). This was because until the last few months, DeFi was indeed viewed as a toy and a fun little experiment – not something to be taken seriously by anyone. Even everyone’s favorite DeFi tokens like SNX and AAVE were thought of as uninvestable jokes for all of 2019 which, in hindsight, was an incredibly naive view. What I find particularly amusing about this is that we went from thinking these tokens were trash to thinking that they were going to just continue exploding in value (during the latest mini bull market we had). And, as always, the truth was somewhere in the middle.
Every day that passes adds further legitimacy to DeFi with bigger players in the ecosystem such as Coinbase making real strides into growing the adoption of certain protocols (they have Compound and dYdX integration right in their mobile wallet app). On top of this, DeFi is maturing rapidly with more and more exotic financial protocols being launched (such as BarnBridge) and teams are now building serious risk frameworks to help users make better, more informed decisions about where they put their money. We also have new money legos coming to mainnet almost every week which further expands the universe of tools that developers have to play with.
On top of all of this, the centralized incumbents are now starting to fight back against DeFi because it is eating into their market-share. Uniswap is doing more volume than Coinbase on some days, layer 2 promises to bring much better scalability which will allow protocols such as dYdX (a decentralized BitMEX) to grow rapidly and new users are flooding into DeFi every day. DeFi is also offering users are much better and smoother experience than the centralized services can. The ironic thing here is that these same centralized incumbents looked at DeFi as a toy just a few months ago – oh how rapidly the times change.
I think that DeFi is inevitable – we will build an entirely parallel financial system that is open and (hopefully) fair for everyone. In saying that, it’s going to be a long & rocky road and I’m sure we’ll fail in speculator ways on this journey but as I’ve said before, if we play our cards right, I believe that Ethereum will become the greatest economic nexus in history.
Have a great day everyone,
All information presented above is for educational purposes only and should not be taken as investment advice.