{"id":111065,"date":"2020-11-12T15:16:32","date_gmt":"2020-11-12T12:16:32","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/finance-redefined-where-does-defi-go-from-here-nov-4-11\/"},"modified":"2020-11-12T16:14:54","modified_gmt":"2020-11-12T13:14:54","slug":"finance-redefined-where-does-defi-go-from-here-nov-4-11","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/finance-redefined-where-does-defi-go-from-here-nov-4-11\/","title":{"rendered":"# Finance Redefined: Where does DeFi go from here? Nov. 4-11"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a29bba765703\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a29bba765703\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/finance-redefined-where-does-defi-go-from-here-nov-4-11\/#Smart_contracts_could_soon_buy_stuff_on_Craigslist_sort_of\" >Smart contracts could soon buy stuff on Craigslist, sort of<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/finance-redefined-where-does-defi-go-from-here-nov-4-11\/#The_end_of_yield_farming\" >The end of yield farming?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/finance-redefined-where-does-defi-go-from-here-nov-4-11\/#A_reminder_to_why_DeFi_is_good\" >A reminder to why DeFi is good<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Finance Redefined: Where does DeFi go from here? Nov. 4-11 <\/strong>&#8221;<\/p>\n<div data-v-5a136f3a=\"\">\n<p>This week definitely feels calmer, more positive than the last. And there\u2019s good reason to be optimistic for DeFi bulls too, as the market posted a decent recovery since my last <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>letter.<\/p>\n<p>People are calling it a \u201cblue chip\u201d rally, which means that it\u2019s household names that are leading the charts (at least that\u2019s the standard definition, it may also refer to their blue logos). AAVE and YFI rallied the most, followed by decent recoveries for Curve and Synthetix. These are big names, but at the same time I would give the \u201cblue chip\u201d moniker to stuff like Uniswap, Compound, Maker \u2014 all of which made lukewarm gains at best.<\/p>\n<p>In any case, the DeFi Pulse index is doing quite well:<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2020-11\/dd89408c-e6a1-4252-a92d-7f90a55cc7d6.png\" \/><\/figure>\n<p>But to me it just seems like a bounce from oversold conditions, which h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ens even in deep bear markets. The drop stimulated discussion about what exactly we witnessed in the summer \u2014 is it like 2017 or 2016? The former had a brief cooldown around September-October to end the year in style, the latter was just fairly constant but produced slow growth back to previous all-time highs.<\/p>\n<p>As much as the \u201cthought leaders\u201d on <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Twitter<\/a> like to be bullish on everything, I\u2019d say we\u2019re firmly in the 2016 camp, and there\u2019s this one chart that just nails the point so succinctly:<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2020-11\/25ab5a0b-2f60-4dc4-b2d7-5211ea8cbbf9.png\" \/><figcaption style=\"text-align: center;\"><em>Google Trends for Bitcoin (red), Ethereum (yellow), DeFi (blue).<\/em><\/figcaption><\/figure>\n<p>There is indeed a pretty sizable bump for DeFi searches around summer. Don\u2019t see it? That\u2019s because its relative performance pales even in comparison to cryptocurrency as a whole, and mainstream awareness like in 2017 is nowhere to be seen. But it is worth mentioning that these results come from a standing start:<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2020-11\/0b33c705-4dac-4a6f-b021-3783af3935ae.png\" \/><figcaption style=\"text-align: center;\"><em>Searches for DeFi filtered by \u201cfinancial markets\u201d category.<\/em><\/figcaption><\/figure>\n<p>There is definitely a positive argument to be found here, as it seems we\u2019re still at the top of the first inning.<\/p>\n<p>But at the same time I think this DeFi rally just encapsulates the worst aspects of 2016 and 2017 into one. We saw a lot of market naivet\u00e9 and a fundamental failure of the backend infrastructure that resulted in gigantic fees \u2014 basically 2017 \u2014 and at the same time the average Joe just didn\u2019t hear about it \u2014 that\u2019s 2016.<\/p>\n<p>The CEO of FTX is now saying that even Ethereum 2.0 wouldn\u2019t be enough to deal with any load even approaching mainstream popularity, which is reasonable given the much higher processing requirements of DeFi smart contracts.<\/p>\n<p>Overall I think the sector likely won\u2019t resume growth until we have much, much better scaling \u2014 promising news on that front for 2021 \u2014 and more use cases than just playing Ponzi <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">game<\/a>s or, at best, lending for rich crypto whales.<\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Smart_contracts_could_soon_buy_stuff_on_Craigslist_sort_of\"><\/span>Smart contracts could soon buy stuff on Craigslist, sort of<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A pretty cool item I covered this week is the birth of Boson Protocol, a DeFi primitive for purchasing physical goods with blockchain. Sounds pretty insane but the concept is relatively solid.<\/p>\n<p>You have these non-fungible tokens representing a claim on a particular item. Specifically, it represents a two-way escrow between a buyer and seller. It\u2019s like holding tokenized Craigslist deals, which is a pretty neat concept. The NFT can then be redeemed for its underlying product, and the economics of it are designed to minimize third-party arbitration as the system matures.<\/p>\n<p>Obviously I can\u2019t vouch for the specifics of the project and whether its intended proposal will find traction, or even just work in principle. There are a lot of moving parts there with multiple sets of bonds and incentives, so I\u2019m sure a lot of testing will be necessary.<\/p>\n<p>For now they\u2019re envisioning physical airdrops and loyalty points as the main use case \u2014 which I\u2019m hearing is something the big corporations are actually fairly interested in. But in <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>, I\u2019m excited for any new project that attempts to bridge the blockchain-to-world gap.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_end_of_yield_farming\"><\/span>The end of yield farming?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Uniswap token holders scheduled a community call for Thursday to discuss whether liquidity mining rewards should be allowed to expire on Nov. 17.<\/p>\n<p>Uniswap is currently by far the largest project by total value locked, clocking in at $3 billion. While it was always quite strong even on its own, UNI liquidity mining propelled it to new heights for fairly obvious reasons.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2020-11\/2bf1b4e7-8263-47e4-b66c-0ff2fd708bcb.png\" \/><\/figure>\n<p>For Uniswap, yield farming has a very tangible purpose \u2014 propping up liquidity on Ether pairs, as traders are incentivized to join the liquidity pools to collect the token.<\/p>\n<p>That definitely had its mark \u2014 Uniswap is an incredibly liquid place for ETH, you can place trades for hundreds of thousands of dollars with basically no slippage.<\/p>\n<p>But existing holders are paying for that with dilution, and it is arguably one of the reasons why UNI price is so low.<\/p>\n<p>The community should, and probably will, evaluate this as if they\u2019re the CEO of a hypothetical Uniswap Co. While the company isn\u2019t really losing money because crypto internalized the \u201cmoney printer go brrr\u201d meme even better than the Fed, it\u2019s still worth doing a cost-benefit analysis.<\/p>\n<p>I\u2019ve talked about the cost, now what are the benefits? More users, more liquidity, so in theory there should be more volume. We\u2019re kind of seeing a confirmation of that, as volumes are staying high despite the market downturn:<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2020-11\/a167acaf-1c42-4089-949d-8820ad8f0d06.png\" \/><\/figure>\n<p>The issue I see with subsidizing liquidity right now is that there\u2019s no competitive advantage to it. Usually, you subsidize users to gain market share, but Uniswap is by now quite entrenched and clearly dominates the market.<\/p>\n<p>Overall, I think the sooner we let go of printing money to subsidize something, the better.\u00a0My opinion here is obviously just that, my opinion, so feel free to disagree with me.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_reminder_to_why_DeFi_is_good\"><\/span>A reminder to why DeFi is good<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Cred filed for bankruptcy this week.<\/p>\n<p>Like its competitors BlockFi and Celsius, it offered yield on a wide basket of cryptocurrencies, especially those not on the Ethereum network.<\/p>\n<p>Nobody really knows what it did with that crypto. It was obviously lent to others, possibly institutions and traders, but we have no real way of checking.<\/p>\n<p>And that\u2019s exactly why DeFi is just better. You know it obeys certain rules, everything is done on a transparent blockchain. Obviously that didn\u2019t completely eliminate scams or questionable behavior \u2014 and you are trading custodial risk for smart contract risk \u2014 but it just feels better to know that your money is where it belongs.<\/p>\n<p>And as a side note, I know some of the aforementioned companies try to position themselves as DeFi or \u201cnot banks.\u201d Problem is that the difference between DeFi and banks is not \u201ccrypto or no crypto\u201d \u2014 it\u2019s \u201ccustody or no custody.\u201d Centralized crypto lenders fail that crucial litmus test.<\/p>\n<p>I also think DeFi fans underestimate how close its building blocks are to the traditional financial system. Some go as far as saying that DeFi can prevent a repeat of the 2008 crash because everything is over-collateralized and transparent. I don\u2019t think that\u2019s a particularly strong argument given how many leveraged derivatives of derivatives we\u2019ve seen so far. I can almost feel a DeFi financial crisis eventually coming up because people over-leveraged themselves on some weird Uniswap token backed by Curve-Aave-Compound Dai, which is backed by a staking derivative of Ether.<\/p>\n<p>But on an individual level, cases like Cred are just an ad for DeFi \u2014 not your keys, not your coins. Everyone in crypto, including Bitcoiners, can agree that one of the primary purposes of this movement is to take back control over your finances.<\/p>\n<p>DeFi excels at pushing the principle of self-custody to new frontiers, and that\u2019s really what it should be appreciated for.<\/p>\n<\/div>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener noreferrer\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/finance-redefined-where-does-defi-go-from-here-nov-4-11\" target=\"_blank\" rel=\"noopener noreferrer\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Finance Redefined: Where does DeFi go from here? Nov. 4-11 &#8221; This week definitely feels calmer, more positive than the last. And there\u2019s good reason to be optimistic for DeFi bulls too, as the market posted a decent recovery since my last newsletter. People are calling it a \u201cblue chip\u201d rally, which means that&#8230;<\/p>\n","protected":false},"author":1,"featured_media":111066,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2020-11\/f3aecd6e-bb94-41da-b0fc-e2b6c9cca566.jpg","fifu_image_alt":"# Finance Redefined: Where does DeFi go from here? Nov. 4-11","footnotes":""},"categories":[1],"tags":[74868,74891,4965],"class_list":["post-111065","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-defi","tag-ethereum","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/111065","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=111065"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/111065\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/111066"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=111065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=111065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=111065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}