Doc's Daily Commentary

Mind Of Mav

Is DeFi’s Bubble Ready To Pop Or Is It Changing Crypto?

DeFi tokens are becoming increasingly more accessible through centralized exchanges, such as Coinbase listing YFI this week, which though net positive for the ecosystem, also presents the risks of FOMO, the fear of missing out.

This phenomenon gets exacerbated by the increased retail demand, and when the price reaches beyond expectations, the fear of getting rekt too.

As in some of the DeFi tokens, like Aave, which surged 7,500% YTD, this makes the secondary market trading an “incredibly crowded long-trade,” which, as recently seen, results in “an unaggressive unwind and subsequent avalanche of margin calls.” 

But despite all this, Denis Vinokourov of Bequant says,

“The prospect of achieving above market average returns is expected to lead to an influx of retail flow and with it, the size of the DeFi ecosystem will begin to swell even more.”

The TV in DeFi is back on the upside, currently at $8.5 billion, not far away from its ATH at $9.5 billion, as per DeFi Pulse.

Pushing the Small Players Out

As we have seen lately, major decentralized exchanges (DEXs) are transacting in greater volume than some of the largest centralized exchanges like Coinbase.

But with this activity comes the ballooning of Ethereum gas costs as the majority of these DEXs are built on Ethereum blockchain. Because of this, the second-largest network is all set to generate $1.5 billion in yearly fees.

The biggest driving force behind this is yield farming, where users participate in the revenue earned by these DEXs. In exchange for providing liquidity on DEXs like Uniswap, they receive reward tokens in the form of yield on their staked capital, which can then be sold in the market or staked across other platforms for more rewards.

All of this happens on the Ethereum blockchain, which requires gas, which is needed to transact with smart contracts. Because the yield return is highly profitable, it increases the demand for ether, which is required for gas. Besides yield farming, placing an order on DEX needs gas as well.

ETH Daily Gas Used Over Time

So, this increased demand for yield farming and DeFi token trading resulted in demand for gas costs and Ether to an ATH. Gas fees generated through the Ethereum blockchain also reached a new peak of $17 million per day, averaging around $5 million. This also means DEXs have become expensive, making it not suitable for small scale traders.

One good thing in this direction came from Ethereum, whose much-delayed update is on track for a November 2020 launch, although only time will tell.

The DeFi craze has also brought Ethereum competitors in the limelight. 

Monero’s lead developer Riccardo Spagni said this costless switch might actually make “ETH less useful.”

He said,

“So “Binance Smart Chain” launched, & it’s basically a drop-in replacement for ETH. You point your wallet at their version of Infura, use their clone of Etherscan, & you keep your ETH address. A bunch of projects are already planning migrations. It has Binance money.”

But according to top DeFi players, Ethereum’s Defi dominance is here to stay, for now at least.



The ReadySetCrypto "Three Token Pillars" Community Portfolio (V3)


Add your vote to the V3 Portfolio (Phase 3) by clicking here.

View V3 Portfolio (Phase 2) by clicking here.

View V3 Portfolio (Phase 1) by clicking here.

Read the V3 Portfolio guide by clicking here.

What is the goal of this portfolio?

The “Three Token Pillars” portfolio is democratically proportioned between the Three Pillars of the Token Economy & Interchain:

CryptoCurreny – Security Tokens (STO) – Decentralized Finance (DeFi)

With this portfolio, we will identify and take advantage of the opportunities within the Three
Pillars of ReadySetCrypto. We aim to Capitalise on the collective knowledge and experience of the RSC
community & build model portfolios containing the premier companies and projects
in the industry and manage risk allocation suitable for as many people as

The Second Phase of the RSC Community Portfolio V3 was to give us a general idea of the weightings people desire in each of the three pillars and also member’s risk tolerance. The Third Phase of the RSC Community Portfolio V3 has us closing in on a finalized portfolio allocation before we consolidated onto the highest quality projects.

Our Current Allocation As Of Phase Three:

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The ReadySetCrypto "Top Ten Crypto" Community Portfolio (V4)


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Read about building Crypto Portfolio Diversity by clicking here.

What is the goal of this portfolio? 

The “Top Ten Crypto” portfolio is a democratically proportioned portfolio balanced based on votes from members of the RSC community as to what they believe are the top 10 projects by potential.
This portfolio should be much more useful given the ever-changing market dynamics. In short, you rank the projects you believe deserve a spot in the top 10. It should represent a portfolio and rank that you believe will stand the test of time. Once we have a good cross-section, we can study and make an assessment as to where we see value and perhaps where some diamonds in the rough opportunities exist. In a perfect world, we will end up with a Pareto-style distribution that describes the largest value capture in the market.
To give an update on the position, each one listed in low to high relative risk:
SoV/money == BTC, DCR
Platforms == ETH, XTZ
Private Money == XMR / ZEC / ZEN
DeFi == MKR / SNX and stablecoins
It is the most realistic way for us to distill the entirety of what we have learned (and that includes the RSC community opinion). We have an array of articles that have gradually picked off one by one different projects, some of which end up being many thousands of words to come to this conclusion. It is not capitulation because we all remain in the market. It is simply a consolidation of quality. We seek the cream of the crop as the milk turns sour on aggregate.

Current Top 10 Rankings:



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