Ryan Seliks, founder of Messari, tweeted today regarding the so-called DeFi bubble saying that the decentralized finance space will soon face its death, the same as what happened to initial coin offerings (ICO) in 2018.
https://twitter.com/twobitidiot/status/1304067226807533568?s=20
Ryan says that we are close to the Ponzi economics tip, rug pulls, and the ETH fees will eat into non-whale gains.
Several decentralized finance projects have sprung up out of the blues in the recent past, offering crazy interests and loans, all this as part of a complex ecosystem. The truth is that some of these projects pretend to be legitimate, only for them to disappear with investors’ money, this is called rug pull.
One of the recent pieces of evidence of rug pull is SushiSwap, even though it was partial. The project’s leader, Chef Nomi, ran away with some of the developers’ funds, leaving the CEO of FTX, a crypto exchange, in charge of what could be salvaged of SushiSwap.
According to Selkis, Decentralized Finance is just one massive pool of capital sloshing around a tiny group of insiders and mercenaries who will soon lack victims to prey on.
Ryan Selkis: DeFi like ICOs
They resemble ICOs, which created enthusiasm for a while, because people thought that every sector would have a coordinating utility token.
ICOs bloomed in 2017, and their basking in the sun is the same as the current state of decentralized finance. Projects that were born simply on ideas rose to amass millions in minutes. Selkis thinks that the present state is too lucrative to be real.
Ryan Selkis says he is open to changing his mind about decentralized finance even though the wise said, if it is too good to be true, it is probably.
Ryan adds that he is enjoying this experimentation. He refers to initial coin offerings, yield farming, or incentivized liquidity provisioning as a novel innovation in capital formation.
People who are attentive are making a killing, but the founder of Messari would not recommend decentralized finance to most people. Other crypto enthusiasts agree with him because they wonder where all the money they make comes from. The amount of money circulating cannot be sustained in the long-term.
Others think that the funds are generated from the guys who buy the token earlier to bootstrapping the flywheel. Other than that, there is also market inefficiency since this a new industry.
