Continue Horse: Why is the DeFi growth momentum weak? Why should we pay attention to the untamed wilderness of Web3?
No need to worry about the long-term growth of DeFi; focus your energy on researching WEB3, after all, that is the uncharted territory and the new world of sailing where the foundation has yet to be built.Author: Continue匹马
Source: Weibo
Why is DeFi not rising or is the rise not vigorous?
With public chains in one hand and DeFi in the other, this was the main tone set last year, and now we must add: the overarching theme of WEB3, which is the guiding direction, unwavering for three years.
Recently, GameFi/NFT has taken the stage, and new public chains are performing. We will discuss WEB3 separately later. Public chains are basically all about market dreams and heavily rely on benchmarking theory. If your public chain is valued at 10 billion, then even if I just have a public chain white paper, it should be valued at least 500 million, right? When Polygon and Axie's Ronin found a breakthrough direction using sidechains, it greatly catalyzed the influx of newcomers to a public chain. The market discovered that the demand after expansion is still enormous, but unfortunately, the current ETH is not enough to support a large number of daily active users. When thinking about the WEB3 theme, there was a question: if ETH 2.0 were fully delivered now, with no expansion or congestion issues, what would users come to do? I think the answer is becoming increasingly clear.
Returning to DeFi, we see that DeFi is still growing rapidly, but the growth curve is definitely not like the 90-degree explosive rise of WEB3. For a long time in the future, DeFi users will certainly continue to grow significantly, but the marginal growth rate will gradually slow down. This is one point;
DeFi users continue to grow, and the curve is slowing down
Second, if you observe the trading volume closely, CoinBase's daily trading volume was around 2 billion a few months ago, while during the same time, UNI's daily trading volume was about 1-1.5 billion. Now CoinBase has roughly recovered to 4 billion daily, but UNI's daily trading volume is still 1-1.5 billion. The trading situation is similar for the three major lending platforms, which are also facing a transition from growth stocks to blue-chip value stocks, with the core issue being the month-on-month growth rate. We know that stock price = E * PE; the formula is simple, with only two variables determining the stock price: one is profit, and the other is valuation. Similarly, when UNI's trading volume remains unchanged, indicating that profit remains unchanged, the only way for the stock price to rise is through an increase in valuation. If you recall, the long-term PE of exchanges like FTX/Binance is around 5-10. It is still relatively difficult to raise valuation and expectations for sustained growth in the future, so UNI's price is basically a Beta-style rise. UNI holds a 60% market share in Dex, and the same can be inferred for other DeFi projects.
Peak at 10 billion
Dex's share will continue to increase
Third, rising tides lift all boats, which requires a continuous influx of fresh water. After one or two years of explosive development, the core tracks of DeFi have basically been determined, and it is now very difficult to find projects that generate excitement. Therefore, we just need to position ourselves in core varieties, and we can basically enjoy the entire future growth dividend of DeFi. The only few variables exist in the derivatives track, which is one of the reasons for the high hopes for Perp/Dydx. Now, I manually check Dydx whenever I have free time and enjoy it.
DeFi fundamentals recover lost ground
Therefore, there is no need to worry about the long-term growth of DeFi. With the basic layout of public chain DeFi in place, there is no need to be overly concerned. The focus should be on investing energy in researching WEB3, as that is where the uncharted territory lies, a new world of unbuilt skyscrapers.
