Are DeFi Tokens Worth Buying?
The decentralized financed (DeFi) has been growing at a rapid pace this year. Things have gotten to the point that the DeFi space is the fastest-growing segment of the cryptospace at the moment.
Critics have hit back with slow progress on the implementation of ETH 2.0. Many say that the DeFi space is just another bubble waiting to burst. It has led many people to ask the question: "Are DeFi tokens worth buying?”
There are so many projects that are flooding the DeFi space. It has led to a renewed interest this year. Returns daily of several tokens aren't uncommon. Aave (LEND) token for instance had prices of $0.250924 (5.63%) at the time of filing this report. To answer this, we shall be considering the pros and cons.
The Cons of DeFi Implementation
Let us start with the cons. The Defi space is still new. Many people are wondering if the current interest is just a fad or will pave the way to a new world of endless possibilities.
The recent Coinbase announcement on the addition of 18 DeFi tokens caused a surge in tokens. This series of price increases is known as the "Coinbase effect".
The Coinbase effect is one of those triggers that point to signs of a bubble. Prices usually correct themselves after the initial excitement ends when tokens are listed.
Something else to consider is the extremely volatile and high increases in several DeFi tokens. It is reminiscent of the 2017 crypto-bubble when everything just kept going up. The fallout of that bubble occurred in 2018. Things picked up in 2019.
Many lost confidence in cryptospace and time as well. The good thing is that most of the bad actors have been weeded out. Institutional investors are paying attention to cryptocurrency ecosystems.
The Pros of DeFi Implementation
In favor of DeFi, most of the tokens meet utility use-case scenarios. Aave's (LEND) has proven that flash-loans are possible on a responsible and ethical basis.
It means that the increased interest in the space is genuine. Added to this is the fact that DeFi as a concept is a first use-case that has given D'Apps their recent traction.
Vitalik Buterin seems to have become a self-fulfilled prophet with his predictions about decentralized apps a few years ago. DeFi does everything he said that D'Apps will be able to do.
The ease of entry into the cryptospace has drawn many newbies into DeFi. The implementation may still be chunky as opposed to advanced financial products. One great thing is that DeFi works.
As ETH 2.0 comes on stream, it will become easier to scale applications. Transactions will become fluid. We will see a smooth transition of financial systems from legacy ecosystems to DeFi.
After the markets correct themselves ( and they will) a new wave of price highs will occur due to ETH 2.0. In answer to the question: “Are DeFi tokens worth buying?” Yes, they are. But, for the long term. HODL.