Defi is up and down

The overall situation is : "The general trend is down, the Ether is tough, the other chain is sinking, and its weaknesses are exploding frequently."

The Defi boom that started last spring , after more than a year of enthusiasm, has entered a consolidation period, and the heat has obviously weakened. According to official information at the end of June, the Defi Agreement TVL(Total Locking Volume) was $72.6 billion, down 9.8% from $80.2 billion at the end of May, and net locking volume decreased to $55.2 billion. Compared with the peak period, TVL has almost dropped by half. In addition to the decline in currency prices, there should be a lot of withdrawal funds. The reason is actually very simple. So far , the currency circle has not generated much real borrowing demand. Only when the market is good, there will be a lot of borrowing to speculate but the market has been quiet during this period. What are you doing with borrowing? As for the lenders, there is less lending and the yield has dropped, and there is not much enthusiasm to mortgage interest.

The so-called etheric toughness means that when the market is not very good, the advantages of big players on the ether chain are undoubtedly reflected. A few months ago, Pancake , the BSC chain, had become the top of Defi 's TVL list for two consecutive months , and now it is out of the top 3 TVL . At present, the top three are curve, AAVE and compound, with TVL of US $8.3 billion, US $7.7 billion and US $7.1 billion respectively. Pancake ranked fourth with US$ 6.9 billion . Judging from the original peak of more than US$ 20 billion, it dropped by more than 70% . At the critical moment, the sword will be ready, and it still depends on the ether chain. After this round of sinking, I am afraid the dominant position of the ether chain Defi will be consolidated . Fundamentally, the Ethereum chain has the advantage of large users, and the Defi project on it is relatively strong and safe. When the gas fee decreases, the competitiveness becomes stronger.

The sinking of its chain is naturally relative to the ether chain. Except for the ether chain, the Defi of almost all other chains have suffered a major or even a super major blow this time. The price of a large number of Defi platform coins is only a few tenths of the original price, which makes liquid mining almost a large area of ​​"impermanence" loss. This impermanence is not unconventional, but it's like the "impermanence" in hell coming out and hooking the soul .

Everyone knows how frequent the weaknesses exploded. How many Defi projects exploded some time ago ? It has become fertile ground for hackers. The reason, Defi early too hot, a lot of projects, especially non-Ethernet link project, is shoddy imitation disks, fundamental and technical team, but related, including BSC projects on as well. If it runs for a little longer, hackers will see through its weaknesses, causing widespread theft and loss. There are also unscrupulous projects that are highly suspected of being stolen.

How should we seize possible opportunities from the perspective of investment speculation?

1. Demand determines the trend. The turning point for Defi lies in the improvement of the market . Obviously, there are two main lines of Defi , one is lending and the other is DEX . Both are inseparable from the market. If the market improves, the demand for funds will rise significantly, and the number of people who need to borrow coins will increase, which will drive the increase in total demand and the rate of return, and will also attract new mortgagers to invest in funds and increase TVL . When the market improves, the trading volume of DEX will of course increase, the fee income will also increase, and the rewards allocated to liquidity providers will increase, leading to an increase in the rate of return. Therefore, whether it is a loan or a DEX project, the degree of enthusiasm with the market is positive feedback . If market may recover at the end of July , the operation and profitability of the natural Defi project will improve. Defi cannot form stable income like traditional finance. It can only rely on the circulation of funds in the currency circle itself. The speculative nature far exceeds the investment nature.

2 . Medium-term investment perspective Ethernet Square chain, short-term speculative look at other chains . "Ethereous toughness" proves that Defi projects on the Ethereum chain are the main body of Defi , and this status is actually being strengthened. The inclusion of Ethereum L2 will make the advantages of projects on the Ethereum chain more obvious. In the past, the biggest reason why other chains had opportunities was the high handling fees.When L2 become popular in future and the handling fees were also controllable in future, naturally the biggest disadvantages would be compensated. Looking at other chains for speculation, it is only short-term, because at this stage their Defi platform currency and mining currency have fallen too badly . However, the possibility of growing up to compete with the Ethereum chain is very small, including the popular projects on the BSC chain.

If the bull market is not over, take the Bitcoin market as an example. So far, it can be regarded as an ABC three-wave structure (if the bulltail double tops in the future, it can be regarded as 5 waves), and the current big B- wave decline may run to the later stage. If the bull market has ended, then the downward phase may also be the ABC three-wave structure, and the A- wave decline has also run to the latter stage. After the end of the month could open the B wave rally. Defi market performance should be lagging compared to Bitcoin, but the structure should be consistent.