How Defi Can Get Over The Stench Of Ponzi Schemes And Shitcoins

January

12

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People are attracted to wealth. Even large sums of money draw avaricious, cunning individuals. The stratospheric ascent of BTC has spawned more than 1500 more cryptocurrencies, many of which aren’t even mentioned, all run by talented teams and promising to address major global problems.¬†

With their empty bowls raised aloft, the general populace stands below. They are attempting to ride the next massive wave with hopes of retiring early and making a lot of money.

Now that Crypto Winter has arrived, the high-octane summer ride of cryptocurrency has cooled down. Many initiatives that generated a lot of excitement but didn’t live up to expectations have been shown to be frauds, Ponzi schemes, and worthless “shitcoins.”

Many critics have also labelled cryptocurrencies as merely a hoax giving hollow promises of generational wealth, with the global market capitalisation dropping from all-time highs of US$3 trillion to less than a third of its former grandeur.

DeFi (decentralised finance) attacks have also cost over US$4.2 billion, demonstrating that security and accountability are still not ready for widespread usage.

Although hype and platforms with a strong meme culture formerly dominated, Crypto Winter has shown that these elements cannot serve as the cornerstone of a long-lasting project.

DeFi has likewise been downgraded to the status of an “online casino,” despite its past proclamations that it was “the future of finance” because of its capacity to overcome wealth and geographic boundaries through techniques like yield farming.

Bear markets eliminate unprofitable ventures, requiring consumers and builders to concentrate on usability and pragmatism. This is the silver lining to everything else.

Without the euphoric haze and the “get rich quick” mindset to serve as diversions, we are better equipped to explore deeper and more logically for the solutions to pressing issues.

Where does the yield originate from? It is one such question that was frequently ignored. Unfortunately, the response is often, “If you still don’t know, you are the yield.”

In order to rebuild consumers’ lost faith in DeFi and let its potential shine through, builders must focus even more on usefulness and practicality to deliver long-term, non-Ponzi rewards.

The dwindling financial markets and the rising number of shuttered or failing platforms further feed doubt about promised returns, resulting in the search for “real yield.”

Having external and natural sources of income for a platform that is not just dependent on new investors and that provides returns in blue-chip assets is as genuine as it gets in the world of illusory “magic internet money.”

In keeping with this expanding trend, some platforms have begun to market themselves as suppliers of “real return” to attract user interest. However, how can we spot the wolves in sheep’s clothing?

Even though it could take some time and effort to study and comprehend, learning how the protocol generates cash will most likely be helpful if you delve beyond the protocol’s surface.

DeFi Is More Than Simply A Virtual Casino

Some users are at ease with high levels of risk for great rewards, but the bulk of people who investigate DeFi are not.

 

About the author, Awais Rasheed

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