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Is there too much “noise” in DeFi?

In your opinion, has the increase in attention and recent influx of value into the space over the past year just made it all the more chaotic and difficult to navigate, or is it still relatively straightforward for truly innovative projects that will continue to improve the DeFi ecosystem to not just survive, but thrive?

For example, do top tier audits matter more than “meme” value to the long term success of a project?

When I see the rise of Doge and Shiba to multibillion dollar marketcaps, and on the otherhand crosschain DeFi protocols with a top tier audit in the microcap category, it makes me think that the space is still extremely immature and we still have plenty of room to grow.

What are your thoughts?

What do you think?

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18 Comments

  1. I would say it’s not unusual for an asset class still finding its feet & determining its value capture to be quite ‘noisy’. There were always going to be a lot of projects/coins (and people) just around to latch onto the initial hype & make a quick buck. It’ll take a bit of time to properly weed those out and let the ones who are building things of true value shine through. Those which continue to innovate and drive the sector forward will likely be heavily rewarded in the years to come imo

  2. Overall, I think the explosion of innovation is great. Like anything, 90% of the new products will be crap, but the 10% that survive will change the world.

    From a practical side, coming at this from someone who’s trying to create a meaningfully innovative product, the resources are *way* too strained.

    Let’s just talk about audits. Most reputable firms have a 6 month backlog of clients. A large project will cost somewhere in the realm of half a million dollars. So now that means any serious project has to raise venture funding to even have any hope. Well that’s a 3 month process at least, assuming you can even get it for a pre-market product.

    From a developers standpoint when you look at the time and difficulty of doing something ambitious, it’s not surprising that many choose to fork dog tokens instead.

  3. >When I see the rise of Doge and Shiba to multibillion dollar marketcaps, and on the otherhand crosschain DeFi protocols with a top tier audit in the microcap category, it makes me think that the space is still extremely immature and we still have plenty of room to grow.

    I got into the crypto market almost 5 years ago and I can tell you with that I was never so confidence about a certain blockchain technology.

    There’s tons of room for growth and if you compare it to other ‘trends’ the blockchain space had like ICOs, STOs etc, DeFi seems the only practical one.

  4. My conclusion is that all the money pouring into meme coins is effectively providing a training ground for the future devs of the of the projects with real use cases. I imagine the ridiculous price action on meme coins is providing experience with edge cases that devs might never come across if they were working on a serious project where the charts were a bit more sane.

  5. These are just growing pains. As the market matures, investors will get wiser and better-informed. You can already see this happening. Third party sites are popping up that help you determine if code is safe. Not just auditing sites, but other sites as well (Rugdoc, etc).

    Auditors are making names for themselves as they prove themselves trustworthy. You see ones like CertiK that churn out audits like McDonald’s churns out burgers: their record is less than stellar, but it’s better than nothing. And they do about 20-30 audits per day…and they only take a couple days to complete.

    Then you have companies like ConsenSys Diligence, a top-3 firm that only does 16 audits per year, they cost nearly $100k, and their audits take nearly a month to complete. They’ve done projects like Uniswap, 1inch, AAVE, Bancor, and 0x. And I know ConsenSys just successfully completed an audit of the only yield optimizer on BSC, which is big news as well.

    You can see now that people are actually starting to care about who has performed a project’s audit. For example, if a yield farm says that Techrate performed their audit, I’ve noticed that users don’t take the audit as seriously. They’re much more careful. The free market will adjust accordingly and people will soon stop trusting those projects. It’s already starting to happen.

    Users will get smarter and not just throw their money at any ol’ project, and you’ll see legit projects raise to the top without forcing regulations.

    Private companies will do what people want and are willing to pay for. Supply and demand. Take Rugdoc and Consensys for example: they will find that their services have become valuable enough that companies are willing to pay more $$$ for them, and soon, users will only start trusting certain projects/yield farms if it has been audited by auditors with a proven track record, or if it passes Rugdoc’s filters, etc. (BTW, I’m not saying Rugdoc is quality; I’m just using it as an example of private companies that will find success and have to get better because they offer free-market solutions to a problem. And if they don’t keep up, people will create a company that does, as long as there is demand for it.)

    So I would advise to find out which yield farms have staying power. Which ones were willing to pay for a top-tier audit? That shows they’re in it for the long haul.

  6. This is indeed one of the amusements of DeFi as you could get drowned in the sea of defi. Nevertheless, I don’t think ti has really made DeFi difficult rather I see it as a normal period where lots of individuals are exposed to the gains of crypto despite the risk in them.

    As it’s best communicated, individuals should carry out their own research and get to understand these projects before they invest, I’m more concerned about the other people watching me as I carry out my trade, which I see has been the leading cause for the creation of private networks but we haven’t seen this implemented on leading DEXs and Lending platforms.

  7. Mimetics are important and play a role in catapulting shiba or doge – project with utility will survive for many years – crypto space is so nascent that picking the google or amazon of the DeFi space now will be difficult … but what doesn’t come out in the wash comes out in the rinse…if the project doesn’t have the legs it won’t last (look at 2016-2018 – sooo many of those ICOs never went anywhere – top ten then and now are very different)

    Look at VC funding that’s happening – billions getting invested from some of the smartest minds, many of which are contrarian. I’d bet on DeFi. I am betting on DeFi – calculated bets and plenty of DYOR. When the DYOR barrier comes down a lot or even maybe a little, a flood of further adoption will occur ❤️☀️😘🙏🏽

    More evidence – was looking for other references but this will do:

    [VC Funding ](https://www.theblockcrypto.com/linked/111026/crypto-vc-funding-q2-data-research)

    https://www.tbstat.com/wp/uploads/2021/07/Screen-Shot-2021-07-05-at-11.00.04-AM.png

  8. I believe DeFi is doing just great actually. The fact that one or two meme coins are defying everything we believe with regards to DeFi and investment doesn’t prove otherwise, it’s just one of those numerous things. Most peeps are around for the momentary gain and nothing more. They ignore the risks involved and are all about profits

  9. Hustling and bustling sector, of course it’s going to be making waves. I don’t think its a bad thing. Just means you are in on something that’s new and interesting.

  10. I imagine it’s no different than a “Gold rush” on the frontier. A few crazy stories will come back to “civilization” of mountains of gold, with dragons and orks and fairy princesses. Desperados and gamblers and saloons/brothels and hardware vendors will race to claim market share before “civilization” catches up and regulates all the fun/profit out of it.

    Everyone will be armed, everyone will be suspicious, many will fail or be injured or die. Some will strike it rich, many will manage to make “comfortable” livings.

    In 10 years it will have police and revenuers to skim off the labor of the pioneers. In 20 years they will make nostalgic films about it. In 50 years the govt will make it illegal to possess gold, and make you use fiat. Then use that fiat to enslave you and your descendants.

  11. Any time there’s a new technology there’s a cambrian explosion of competitors until the top few shuffle to the top. There were 100s of US automobile companies when cars were new.

  12. Totally agree, although, I do believe that memecoins are the gateway to crypto. normies will definitely figure that the gambling is easy way to lose money and diamond hands are always the winners here. Time to accumulate DEFI projects like BAL AAVE and RELI. when the bear market occurs, defi projects will dominate

Please prove me wrong

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