Why did DeFi projects become so popular?


The explosive growth of the decentralized finance niche is driven by the greed of investors, in addition, this process is absolutely n...

The explosive growth of the decentralized finance niche is driven by the greed of investors, in addition, this process is absolutely not controlled. This statement was made by the creator of the Yield.finance YFI project AndrĂ© Cronier at the Smart Contract Summit 2020. Recall that YFI became a real sensation this year: the cryptocurrency has risen in price a thousand times in just a month and a half and now costs much more than Bitcoin.
The native token Yield.finance under the ticker YFI has indeed become a major hit this summer. Today the coin is valued at 34 thousand dollars, while on July 18 it cost just 34 dollars. The peak of the rate was recorded on August 31 - it amounted to 38 thousand dollars.
The cryptocurrency chart for a month and a half looks like this.
YFI price chart for a month and a half
The tokens of many projects follow a similar path - albeit on a smaller scale. It is this earnings prospect that attracts people to the niche. Still,  it is unlikely that you can invest 100 dollars anywhere else and get 100 thousand after 45 days .

DeFi is out of control

Cronier noted that the main reason for the hype around DeFi at the moment is the fear of many investors missing out on big profits. To buy tokens, they only need a couple of "success stories" about how much new cryptocurrencies have risen in price in a short period of time.
That is, Cronier hints that the niche is now driven mainly by the greed of investors. They want to make money on the crazy growth of coin rates and therefore are investing in more and more projects. If at least one of them shoots like YFI, the investment idea can clearly be considered successful.
According to AndrĂ©, the growth in popularity of projects cannot be contained. However, when the situation gradually returns to normal, truly valuable projects like Synthetix, Compound or Chainlink will still remain.
Co-founder of the Aave project Stani Kuleshov expressed another interesting idea. Here is his line, quoted by  Decrypt .
I am afraid of the rapid growth of DeFi protocols. They seem to be trying to accumulate all the wealth in general. They are turning into banks - the institutions that decentralized finance is called upon to fight.
Recall that DeFi is a blockchain-based financial instrument that is an alternative to traditional banking services on a decentralized basis. With the help of DeFi, you can issue loans, receive coins in debt, earn on deposits of different platforms, participate in decentralized lotteries, and much more.  Also, the platforms also allow you to conduct trade transactions without any intermediaries, such as centralized exchanges. The most popular of these is Uniswap, which makes it possible to exchange ether for any ERC-20 token.
Innovations in the field of decentralized finance will form the basis for the future of financial relations on a more global scale, says Synthetix founder Kane Warwick. Here is his comment.
We are all in the early stages of transforming traditional financial systems into their decentralized counterparts. Everyone who is now involved in this process will receive a huge reward for their invested time and invested capital.
DeFi operates on the basis of smart contracts, and you can assess the scope of growth in the sphere by the amount of funds operated by these same smart contracts. According to the DeFi Pulse platform, the value has already surpassed the $  8.2 billion mark . It is growing at a tremendous pace: back in early August, a little more than $ 3.5 billion was blocked in DeFi.
Amount of blocked funds in DeFi smart contracts at the moment
The experts' comments are really relevant. The growth of the decentralized finance niche turned out to be truly unexpected and fast. As a result of this, a huge number of people started using decentralized exchanges and becoming familiar with other components of DeFi. Moreover, most of them are probably driven by the desire to earn, which is more than justified in the current situation.
Over time, the hysteria around the industry will begin to subside, because the niche will not be so new, and new projects will be launched less often - and bring not so much. In the meantime, we will have to endure and get used to the idea that now for the transfer of ethers or other tokens we may be asked for about $ 5.

Cryptocurrency Magazine - Crypto Market Updates: Why did DeFi projects become so popular?
Why did DeFi projects become so popular?
Cryptocurrency Magazine - Crypto Market Updates
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