Breaking the deadlock of the counterfeit bear market requires a revival of DeFi
Without DeFi, the price of Ethereum might still be at 400.Author: Alex Liu, Foresight News
If DeFi did not exist, the price of ETH might be $400. DeFi has added the most market value and use cases to ETH so far, not the other way around. When DeFi is neglected, the sentiment in the ETH ecosystem is low, and this is not a coincidence. The only way for ETH to reach new highs is through DeFi; everyone should realize this. ------ Sam Kazemian, founder of Frax Finance
What is the current state of the crypto market?
It is a bear market for altcoins ------ Although BTC is still fluctuating around $60,000, many altcoins have retraced all their gains from this round and even hit new lows. New coins often "peak upon debut."
More gamblers than believers ------ "Value investing is in vain; gamble on MEME coins to live in the palace." This is not a joke; it reflects the real views of many friends in the industry who feel "wealth anxiety." They prefer to speculate on new coins rather than old ones, even if "friends in the group cut each other" without giving VCs a chance to "pick up the pieces."
Lack of capital inflow ------ There is no so-called "Mass Adoption," no retail inflow, only PVP among participants. If A wants to make money, B must lose money; there is no shared growth of the pie.
How can we break the deadlock? I believe we need a renaissance in DeFi.
The Dilemma of DeFi
DeFi has also struggled in this cycle. It has lost its narrative heat in an era where traffic is king and has become neglected. How did this situation come about?
90% of the crypto market is a narrative game, and the frustrating fact is ------ most influential shillers and KOLs have no stake in DeFi tokens. It is more profitable for them to promote meme coins they bought minutes ago or collaborate with new protocols that allocate large amounts of tokens to KOLs.
Those who create narratives rarely hold DeFi tokens. KOLs do not see the value in mentioning OG DeFi projects because only early insiders can reap the maximum benefits: a large supply of tokens is held by teams or VCs, most of which have already been unlocked.
Therefore, the task of promoting DeFi tokens seems to belong to the project builders themselves and the true believers in DeFi.
In short: the dilemma of DeFi is an inevitable result of a market atmosphere that is restless and dominated by speculators. However, if the crypto market has 10% of actual use case pursuits beyond the 90% narrative game ------ when the market rationality returns, the situation will be corrected.
DeFi, the Future
DeFi has intrinsic value
DeFi tokens are valuable, in stark contrast to the low liquidity, high FDV VC coins and meme coins that people despise.
OG DeFi tokens (AAVE, MKR, COMP, CRV, etc.):
Most are in circulation
Gradually gaining attention for their revenue-sharing mechanisms
Proven PMF (Product-Market Fit) and long-term resilience
Many DeFi protocols have already achieved profitability and have buyback mechanisms (Maker), ve token models (protocol revenue and external bribes to token stakers, Curve), or are planning revenue-sharing mechanisms (Aave). Holding these tokens is akin to having a continuous cash flow.
Current liquidity locked in Curve can earn 20% annualized returns
DeFi is a core use case
What exactly is blockchain, and what problems does it solve? Blockchain aims to address the issue of trust among participants by transforming the traditional model where intermediaries (banks, companies) store data into a system where each participant must store a copy, and a consensus mechanism determines a public ledger that everyone recognizes ------ essentially, it is redundant storage.
Redundant storage is costlier and less economical, and it can only compete with centralized solutions in use cases where someone is willing to pay this premium. However, financial activities with strong property rights, such as trading, transferring, and lending, can tolerate a certain degree of inefficiency and high costs (relative to centralized solutions) in pursuit of absolute security. Decentralized finance (DeFi) is the natural core use case of blockchain.
DeFi is the industry direction
The current problems in the market: more gamblers than believers and a lack of capital inflow, can be resolved with industry development. But in what direction will the industry evolve?
Larry Fink, CEO of Wall Street giant Blackrock, the biggest initiator of this cycle who played a key role in promoting the approval of Bitcoin ETFs, stated that in the future, all assets such as stocks and bonds will be tokenized on-chain.
Can financial assets be tokenized on-chain while bypassing existing decentralized financial infrastructure? Will stable asset exchanges, such as forex conversions between on-chain USD and on-chain EUR, choose Curve? Can on-chain interest rate derivatives (which have a trillion-dollar scale in traditional markets) directly or indirectly utilize Pendle? Will financial asset collateral lending not consider Aave, which has proven its code reliability? (Is traditional finance unwilling to fully decentralize and give up ownership? Can Aave create a dedicated market for Lido, but not customize a market for Blackrock?)
Larry Fink in an interview
DeFi is the industry direction; it has the capacity to absorb funds that can change the industry landscape.
DeFi is Experiencing a Renaissance
DeFi is waking up.
Since Aave proposed its revenue-sharing plan, the token price has nearly doubled from its bottom. The lending position of Curve Finance's founder has finally been fully liquidated, and after the "bad news" has been exhausted, CRV has rebounded from 0.18 USDT to 0.34 USDT. The on-chain data of various protocols is also improving:
The number of daily active addresses on Aave reached a nearly one-year high on August 19.
With the renaissance of DeFi, is a raging bull market far off?
Some views are sourced from: https://x.com/DefiIgnas/status/1824447367417835559
