Why are all defi projects plummeting (Will defi collapse in June 2021)?

Why are all defi projects plummeting? Editor’s note: This article is from the WindWheel Community (ID: FHBT18), authored by Peipei, authorized by Odaily Star Daily for reprinting.

Hello everyone, I am Peipei. Yesterday I saw that all defi projects had plummeted:

The market has been extremely volatile these days.

I remember someone asked me about this question yesterday afternoon. Because today is Wednesday morning, I am more cautious in my operations. I think it is still possible to enter the market, but it also depends on the time period.

If we analyze carefully, we can see that the current market is already in a relatively low period, basically in a downward trend.

Actually, for most people, their impression of defi projects is not very deep at present. Mainly because many users do not understand how to use these currencies specifically and what their future development direction is.

Here it is worth mentioning that the hottest trend in the defi field recently is lending and mining. Although this concept has gained some popularity recently, many people in this field have considered it a good investment target since last year. After all, many projects have seen their prices double immediately after going online. Now it has become one of the main battlefields in the DeFi field. Therefore, we can see that the prices of many defi tokens are continuously declining, especially in DEXs like Uniswap and Balancer. Even the trading volume within the platforms continues to rise. Also, in the past two days, the liquidity pool of Uniswap has been increasing, but the funds in the pool have not seen much growth. Instead, a sharp correction has occurred recently, indicating an increasing interest in this category in the market. Of course, this part of the funds may not have much activity. But in general, this sentiment is not very serious. Whether it is for short-term speculation purposes or to bring in something to deflate the bubble, it is worth paying attention to the new dynamics. For example, this morning, bZx’s official announcement showed that they are shorting ETH and USDT on a new decentralized exchange and announced plans to offer $1 million in bug bounties to users. It is expected that some investors will apply to participate in mining.

In addition, I want to share a chart with you that has an interesting episode. First, it shows that the lock-up amount of defi is about 200,000, while the lock-up value on Uniswap is 100,000 RMB, which means that each address on Debank can earn up to 0.5 yuan. Then, all assets deposited on Uniswap will be released, so a large amount of income can be obtained, thereby increasing the number of users holding Bitcoin and Ethereum.

Comparing these two data seems a bit vague because there is a certain connection between them. Each wallet on Uniswap has its own account balance, and the addresses they own can be exchanged. So it is worth noting that this does not refer to the total number of shares or holdings of a specific address.

Will defi collapse in June 2021?

Editor’s note: This article is from the BlockBeats Blockchain (ID: blockbeats), authorized by Odaily Star Daily for reprinting.

The popularity of DeFi has made people start to ponder a question: what exactly is going on? In the past year, we have seen a variety of decentralized financial projects emerge, among which the most notable is Dex protocols, which have high security, scalability, and achieve more efficient trading methods and asset transfers through this model. After the launch of Dex protocols and Compound’s release of its own lending products in September last year, the DeFi market also experienced a round of skyrocketing. However, the current situation is a liquidity crisis in the DeFi ecosystem, caused by the continuous outflow of funds and the continuous shrinkage of the number of users, and the defi field is undergoing a major “black swan” event.

So what is a “black swan”? In fact, all this is discussed from two aspects, one is the blockchain itself, and the other is the Ethereum network.

Bitcoin, as an important part of cryptocurrencies, is also one of the important support points of blockchain technology. However, due to its complex characteristics, Bitcoin has become digital gold and faces some restrictive challenges, such as smart contract vulnerabilities or other risks. Therefore, Bitcoin needs to maintain the security of the traditional banking system to ensure its safety.

The emergence of Bitcoin is because Bitcoin’s Lightning payment application allows the whole world to interact with the value of the real world, which is the benefit brought by Bitcoin.

However, the birth of Bitcoin is to solve problems such as privacy. If Bitcoin is not widely used, it cannot provide any value. In order to prevent such a situation from happening, when people try to use blockchain technology, they will encounter many problems, such as whether the blockchain can achieve an immutable ledger, or whether it can guarantee complete user data, etc. These are questions that many industry practitioners often raise, and these problems will eventually be resolved and may even have a huge impact. The rise of Bitcoin is happening during a period of global economic slowdown, and governments around the world are adopting a more relaxed attitude to deal with inflation. The emergence of Bitcoin has provided space for the development of this field.

However, for DeFi, it either faces more regulatory pressure or more capital entering the field and promoting new developments. At this time, DeFi participants should pay attention. In the current environment, DeFi projects often face significant legal barriers and high operating costs. Once such cases occur, it will cause greater market volatility risks, affecting the decision-making results of investors.

So, in any case, DeFi projects should avoid being criticized for their technical shortcomings and remain vigilant.