The decentralized finance (DeFi) industry has been under intense pressure in recent months. According to DeFi Llama, DeFi’s total locked value (TVL) has plummeted from over $ 250 billion to over $ 76 billion. As a result, there were many concerns about whether DeFi wasn’t working.
Is DeFi dead?
For beginners, DeFi is a wide range of industries that are trying to disrupt the financial industry. This is achieved by transferring power to those who form part of governance.
DeFi’s goal is to confuse most of the financial industry. For example, you can use a DeFi protocol such as Maker or Compound to borrow in a fully decentralized way.
Similarly, platforms such as Uniswap, Curve Finance and PancakeSwap make it easy to buy and sell cryptocurrencies in a fully open process. There are other decentralized financial platforms that allow you to bet and offer liquidity.
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All DeFi platforms have governance tokens that can be purchased from any exchange. You can participate in its governance by purchasing these tokens. For example, you can vote on whether to move the platform from a smart contract platform like Ethereum to Cardano.
For years, there have been concerns about DeFi. For one thing, the industry has loose regulations and is proficient in fraud and fraud. Similarly, many experts believe that DeFi is very complex to the general public. Also, some industry claims, such as 20% revenue from the Anchor Protocol, are too sweet and untrue.
Over the past few months, DeFi’s TVL has plummeted from over $ 250 billion to $ 76 billion. TVL crashed on all chains including Ethereum, BNB, Tron and Avalanche.
Similarly, DeFi tokens such as AAVE, MKR, ANC, UNI all crashed.
DeFi is not dead
So is DeFi dead? In my view, it’s too early to declare DeFi dead. What’s happening is that DeFi is on the path to maturity for all innovations.
As you know, the same cycle happened in the early 2000s when everyone was setting up a company with the .com suffix. This situation led to the dot-com bubble, which cost investors billions of dollars.
Most recently, this situation has occurred in the electric vehicle (EV) industry. Following Tesla’s success, the number of EV companies has skyrocketed. Many of them are currently struggling or are already out of business.
So I don’t think DeFi is dead, but many protocols like Wonderland and Abracadabra don’t survive. What survives is one with a user-friendly interface and excellent security features.