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22 September 2020

Why DeFi, in its current state, is destined to fail

Why DeFi, in its current state, is destined to fail


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Why DeFi, in its current state, is destined to fail.

For crypto holders, DeFi offers an opportunity to lend their assets to other users, thus earning a profit of about 20%.

Nothing is bad with this one.

There are too many DeFi projects that scream “bubble,” but for general users, it’s really hard to crack down on such frauds.

Only centralized lending platforms have a promising future, and they have proved their credibility already.

Smart contracts, self-managed crypto wallets — how familiar are general users with these terms.

And I don’t even have to mention the number of bugs and glitches on decentralized platforms.

Non-DeFi, or centralized finance, projects have up to 80% of assets working?

Developers can claim their codes are invincible, but they can’t oversee how each user interacts with applications and platforms.

In simple terms, yield farming means the creation of tokens to reward users who provide liquidity to a project.

The trick here is that users have to invest their tokens into the project, and therefore, they’re unable to trade or sell those tokens.

More and more tokens are involved in DeFi because high yields are offered and people want quick profits, but this inevitably leads to reducing the supply available for trading.

Also, DeFi tokens have a low capitalization rate compared with Ether (ETH) and Bitcoin (BTC), and it’s very easy to increase prices on them.

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