DeFi projects keep frozen record $2.02 billion. In less than half a year, this figure has doubled. According to analysts, the market situation for DeFi projects resembles an ICO bubble.
Analyst Larry Cermak from The Block revealed that over the past two weeks he was approached by representatives of three venture funds from Europe, who asked him to recommend them an investment strategy for DeFi market. “This is obviously highly anecdotal but in the last two weeks, I’ve been approached by three European VCs and asked to advise their DeFi investing strategy. This hasn’t happened in more than two years,” wrote Cermak, alluding to the similarity of the growth of the DeFi market with the hype surrounding ICO projects in 2017.
“It might just be a coincidence but seems like generally traditional investors are starting to pay more attention when they anticipate good returns. Similar thing happened in 2017 with ICOs.”
2020 will definitely be the year of decentralized financial services. For five months, the amount of funds frozen in them doubled and exceeded $2 billion, according to the analytical resource DeFiPulse. The most popular DeFi service, which accounts for almost 33% of blocked funds, is Compound. In June, it overtopped MakerDAO by frozen funds.
“Honestly I think we emphasize flashy defi things that give you fancy high interest rates way too much. Interest rates significantly higher than what you can get in traditional finance are inherently either temporary arbitrage opportunities or come with unstated risks attached,” Ethereum co-founder Vitalik Buterin tweeted earlier.