Decentralised Finance: Bull Run Fuel
Over the last 8 months Decentralised Finance has slowly taken centre stage
This sector of “Crypto” exploded, seeing billions of dollars get locked into various decentralised finance platforms like “Aave” or maybe “Balancer” even the hundreds of millions floating around on “Uniswap”.
Did any of us know this was going to happen?
I don’t think many people knew however plenty of us true believers in blockchains potential had a rough idea of what would come eventually.
“DeFi” is not new, it may look new however the whole reason for “Bitcoins” creation was to serve as “Decentralised Finance” so the concept is not new however the technology and understanding is quite new but we did see projects like “Salt” try long before this explosion in popularity.
It was not until “MakerDao” launched that we saw this increase in lending, earning interest on your Crypto.
We now see over 400 million “DAI” in circulation which is all because of “MakerDao” which since gaining traction has now given birth to hundreds of innovative “DeFi” platforms and projects!
Those of us here building during the bear market saw this launch and we also saw it nearly collapse which never happened, in my own opinion MakerDao came out of that situation stronger than ever.
Be Your Own Bank
No doubt you have heard this before with Cryptocurrency however it has not been completely true, yes you can control your own funds and move them at your own leisure.
But… you could not really do the things banks do, that has now changed above i pay homage to MakerDao for pathing the way to this explosion of popularity and for building in times very few had interest.
Let us not forget why MakerDao is even here, Ethereum literally houses 90% maybe even 95% of all DeFi projects which at the moment could cause an issue, already because of demand we are seeing skyhigh fees meaning that this could potentially be a major downside to a full on bull market.
However, Ethereum has now given you the chance to literally do everything a bank does from your phone.
- Want to earn interest on your Crypto? No problem there’s a platform for that!
- Want to provide liquidity to a booming market? No problem there’s a platform for that!
- Hell, wanna yield farm and earn crazy profits from your Crypto? No worries Ethereum lets you choose what risks you think are worth taking!
With the popularity of these platforms and decentralised exchanges overtaking the centralised exchanges in the space this also comes with huge risks of liquidation, scams or being hacked so you should always do your research and also do your due diligence.
As Ivan on Tech says “Big Boy Pants”…
One of the biggest ones being “Fake” liquidity pools on “Uniswap.Exchange”, this occurs when new projects launch and scammers will quickly set up a liquidity pool then exit scam the pool with your “ETH” or “WETH” leaving you with a bunch of worthless tokens.
Now while there are potentially massive gains to be had, this comes with plenty of exposure to risk.
If you are yet to experience a full on bull market in Crypto then you have plenty to learn, getting caught up in your emotions watching your portfolio skyrocket, buzzing from the euphoria of life changing gains.
One easy mistake to make is seeing a new project and thinking to yourself there is an easy 10x but in reality this is just an exit scam, once they hit their goal all groups and accounts will be shut down, liquidity pools drained which at the moment tends to happen on “Uniswap”.
There is also the scenario where scammers will create mickey mouse tokens to look like popular projects looking to achieve the same thing and let people fill it up with liquidity then drain the pool.
Worth The Risk?
This is a personal choice, of course! If you like high rewards you must expect high risks.
However, decentralised finance is not a short term, get rich quick scheme it has legitimate demand behind the crazy returns of recent which is fully understandable because of its innovation and the exponential demand received.
We recently saw news about the “DeFi” project “Aave” say they will introduce mortgages on blockchain with their platform which already provides interest on deposits and allows you to borrow crypto.
For months now, Crypto investors have been enjoying collateralized loans and earning interest on their digital assets along with being able to provide liquidity for markets in the space.
So we already see these “protocols” like “Aave” giving the people what they want way more than the system, this does come with extremely high risk but I for one prefer to know the risk is all mine along with the profit.
One day what the majority of people today see as “crazy” will be the normal, okay it may be more stable and less risky however, eventually the masses will want to be in control of their own finances.
You are witnessing the future being born right before your eyes. Times are changing.