DeFi hype can still be agitated and disorganized
The decentralized financial sector of the cryptoesphere has reached a frenetic status within the crypto industry, spearheaded by lush price hikes and rampant speculation.
„DeFi is Ethereum’s new exaggeration,“ MyEtherWallet, or MEW, CEO and founder Kosala Hemachandra told the Cointelegraph in an interview. „It’s too much noise, so everyone is just running around trying to figure out what the next big thing is and then putting a lot of money into it without even knowing the projects,“ he said.
In 2019, DeFi probably brought to mind different concepts than we see today. DeFi, in essence, existed as a way for people to borrow, lend, and store funds based on their crypto reserves.
Throughout 2020, however, the DeFi sector was inflated, stimulating projects without consistency, gaining significant attention as speculators moved their Bitcoin Secret in search of the best profit from speculation on the price of interest bearing currencies and vehicles. Hemachandra’s comments refer to this new moment driven by exaggeration.
The founder of MEW explained that DeFi boasts both losers and winners, with winners adding more hype to the movement. As a byproduct of the hype, Ethereum network transaction fees have skyrocketed in recent weeks, sometimes costing users between $40 and $80 per transaction.
„That is the main cause of the gas price problem at Ethereum from now on,“ Hemachandra said. He noted, however, that the current situation is an opportunity for the industry to meet the challenge and improve the solutions around Ethereum, explaining that tension can stimulate growth.
Others noted that another potential problem with DeFi is due to Ethereum’s low transaction per second.