Even After Going Parabolic, Ethereum DeFi Tokens Have Room to Grow in China

Ethereum’s decentralized finance (DeFi) tokens have been all the rage over recent weeks, with some literally rallying parabolically.

Take the example of Aave’s LEND, which has gained in excess of 184.8% in the past 30 days and 7,500% in the past year. Or take the example of Synthetix Network Token (SNX), which is also up by almost 200% in the past month.

With such strong price action, there have been some suggestions that DeFi is in a bubble poised to pop.

Weiss Crypto Ratings, market research firm Weiss Ratings’ cryptocurrency division, wrote in June:

“DeFi is one of the most exciting things going on in crypto right now, but the idea that sector will decouple from the rest of the market is ludicrous. Eventually, the mania will end, and DeFi will trade in line with the rest of the market.”

Yet analysts agree that DeFi has the potential to grow even further in the months and years ahead.

How? China, apparently.

Related Reading: Crypto Tidbits: Twitter’s “Bitcoin Scam,” Elon Musk & Dogecoin, Institutions Want BTC & ETH

Ethereum DeFi Can Grow Even Further: The China Effect

According to Dovey Wan, a founding partner of Primitive Ventures, China is not yet excited about the ongoing DeFi craze.

She attributed this to a confluence of factors, which include:

  • DeFi’s ongoing “yield farming” phase is reminiscent of China’s “exchange liquidity mining” phase, which ended with a large bust. The similarities between the two trends of DeFi and exchange liquidity mining is likely deterring some Chinese investors.
  • Since DeFi is very Ethereum-centric, it is naturally not a Chinese community; ETH is not prevalent in certain parts of Asia.
  • Most DeFi applications only have English user interfaces right now and much of the industry’s information is only in English, making it hard for certain demographics to feasibly access DeFi apps.

For those that desire growth, a lack of Chinese capital may be seen as a bad thing. After all, what drove many ICOs and the price of Bitcoin in 2017 was actually a Chinese user base.

But until there are more stable incentive structures, multi-lingual user interfaces, and data/information for global audiences, DeFi’s growth in China will be hard to come by.

Fees Are An Issue

Also preventing growth in DeFi is high Ethereum transaction fees.

Kevin Beardsley, the head of business development of Kraken’s futures division, recently said:

“I have spent $14 on ETH gas fees to transfer/lock my $15 into @CurveFinance and I’m earning a princely $0.079 in weekly $SNX rewards. I’ll break even in just 177 short weeks! (not including gas to close contracts.”

That’s to say, at current transaction costs, a majority of small-scale users are crowded out as it becomes unprofitable to use DeFi.

 

Join Geezgo for free. Use Geezgo’s end-to-end encrypted Chat with your Closenets (friends, relatives, colleague etc) in personalized ways.>>
Did you enjoy this post? Please comment below:

  • Bitcoin
  • Ethereum
  • Litecoin
  • Zcash
Scan to Donate Bitcoin to bc1qcc3xajxvdqjnx2f7j7sfcfun7jagr0nh94fa2e

Donate Bitcoin to this address

Scan the QR code or copy the address below into your wallet to send some Bitcoin

Scan to Donate Ethereum to 0x704671D7591d05Dd0790E86Aee964558E9347b07

Donate Ethereum to this address

Scan the QR code or copy the address below into your wallet to send some Ethereum

Scan to Donate Litecoin to ltc1q7tj9ydra9ylkelu42vypp6cu2v0msf5lc2p5mq

Donate Litecoin to this address

Scan the QR code or copy the address below into your wallet to send some Litecoin

Scan to Donate Zcash to t1LiPaQ7gsSL23FbjXswpSoguP6yAE1xj5B

Donate Zcash to this address

Scan the QR code or copy the address below into your wallet to send some Zcash

 262 

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *