The growing popularity of Decentralized Finance, or DeFi, could backfire and hurt the industry in the future, said Sasha Ivanov, founder and CEO of the Waves crypto-currency platform, in a recent interview with Cointelegraph.
Ivanov compared the DeFi to the ICO (Initial Offer of Coins) trend in a tweet, saying, „Please, let’s not make a new ICO bubble with #DeFI.
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When asked for her statement, Waves‘ CEO said she believes strongly in DeFi, but is concerned about the exaggeration surrounding it:
„DeFi is the future, but now it will experience a bubble in the cycle, which could hinder its development in the long term.“
According to Ivanov, DeFi network tokens „are clearly utilitarian and have a mechanic that gives them value. However, he said, „the price may be inadequate at times, leading to bubble situations.
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Although DeFi may seem less attractive to inexperienced investors than ICOs, due to their complex structure, you are likely to experience volatility and sudden price declines, Ivanov continued:
„DeFi products are more sophisticated in nature than simple Bitcoin Storm tokens, which is likely to limit the flow of unskilled investors, but volatility and inevitable future price declines can seriously undermine the prospects for mass adoption of DeFi, which would be very negative.
The rise of DeFi
The popularity of the DeFi has increased recently. As reported by Cointelegraph, more than 1,000 new DeFi assets were added in May, almost 10 times more than the same period last year.
Meanwhile, the total number of DeFi users is approaching the 600,000 mark.
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As a result, many DeFi-based tokens have increased in 2020, and some showed gains of over 60% last week.