To start off: how _is_ DeFi doing? Are we seeing explosive growth, or is it just a mirage of transmining 2.0?
a) Some others know DeFi better than I
b) I don't know the future, I'm just guessing
c) Not investment advice
d) In the end value is in the eye of the beholder. It doesn't matter what I think, it matters what you all think.
I'm going to start by making the bullish case. And that bullish case starts with the numbers.
Is the world putting its money in DeFi products? Yes. Yes, it is.
Curve.fi has done nearly $100m in volume today, greater than Deribit and Bitfinex put together.
Uniswap has traded $36m today. The majority of its total volume ever has come this month.
1inch is nearing $1b total historical volume
Well, duh. COMP, LEND, MKR and SNX each have higher mkt cap than any DeFi project used to, and combined fully diluted value is billions.
So what's the counterargument?
I actually really like the anecdote that DeFi traded ~2x Bitfinex today. Bitfinex is famous of many things--most of all an anonymous enemy on Twitter (remember when bitfinex'd was a big thing?).
FTX also had similar stablecoin trading volume today to DeFi. But we also didn't count it.
Well, looking at curve.fi and coingecko.com/en/exchanges/u…, it was mostly stablecoins, and governance tokens of platforms trading and locking.... stablecoins.
Most of DeFi right now is people locking, trading, and lending stablecoins against each other.
And why are they buying those governance tokens at so much higher a valuation? Because their projects TLV is up.
It's a positive feedback cycle, starting out of nothing, creating billions of volume, locked assets, and valuation.
It's the entire sub-industry. Out of nothing, it made something.
Transmining. But, you know, decentralized.
I'd like to tell the story of two exchanges here: FCoin and BitMax.
Both tokens pumped exponentially, and then crashed all the way back down.
So how about BitMax, another exchange that lurked at the top of the fake volume leaderboards?
They had successfully built up a significant userbase. And in 2019, BitMax turned off their transmining and fake volume.
We were skeptical. As it turns out, that skepticism was unwarranted.
They launched more features, improved their tech, and listed projects.
What will happen when the hype fades? What industry will we leave behind?
To get there, we have to build good products, and leave behind a space we're proud of when the smoke and mirrors fade away.
Just because someone made a great marketing play doesn't mean there isn't substance.