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DeFi Industry Facing Serious Problem Tied to Uniswap and Network in General

Sun, 11/06/2022 - 09:23
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Arman Shirinyan
Decentralized finance community might be focusing on completely wrong thing
DeFi Industry Facing Serious Problem Tied to Uniswap and Network in General
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The decline of the DeFi industry is not a secret to anyone as the industry has been going down since the end of 2021, with the demand for risk and decentralized assets in general going down since the beginning of the rate hike cycle.

According to an on-chain researcher, the amount of capital on chain looking for yield is extremely high, which results in almost every opportunity yielding negative risk premiums that Uniswap's pools cannot withstand.

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As market data shows, there are over $70 billion worth of stablecoins on the Ethereum network that need productive use cases. Unfortunately, DeFi in its state today cannot offer investors what they actually need.

The lack of innovative and productive cases made DeFi less sustainable and created risks in the ecosystem that new investors simply cannot take, causing a deficit of fresh inflows to the industry.

The researcher suggests that DeFi is currently solving the wrong problem by trying to create a growth narrative for a historic injection of liquidity. It is not what the market needs today. On the contrary, the DeFi community has to abandon the narrative implemented in 2021 and focus on building long-term sustainable sources of innovation that will help the DeFi industry to blossom.

The analyst directly confronted the Uniswap team as they continue to believe that the reality of the financial market does not apply to them and proceed to build and develop the business model that has been successful for the past three years without modernizing it in accordance with the current state of markets.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.