3 Reasons DeFi Investors Should Always Look Before Leaping
DeFi investing is riddled with potholes. Here are some tips to avoid them.
Newsletter
Welcome readers and thank you for subscribing! The Altcoin Roundup newsletter is now written by Big Smokey, Cointelegraph's resident newsletter editor. In the coming weeks, this newsletter will be rebranded as Crypto Market Musings, a weekly newsletter that provides analysis ahead of the curve and tracks emerging trends in the crypto market.
The publication date of the newsletter will remain the same, and the content will still focus on technical and fundamental analysis of cryptocurrencies from a more macro perspective in order to identify key changes in the investor sentiment and market structure. We hope you enjoy it!
DeFi has a problem, pump and voidWhen the bull market was in full swing, investing in decentralized finance (DeFi) tokens was like shooting fish in a barrel, but now that entries into the sector pale in comparison to the market's peak, it is much more difficult to identify good transactions in the space.
During the DeFi summer, protocols were able to attract liquidity providers by offering three- or four-digit returns and mechanisms such as liquid staking, lending via asset collateral, and token rewards for trading. staking. The big problem was that many of these reward offerings were unsustainable, and high emissions from some protocols led to liquidity providers automatically dumping their rewards, creating constant selling pressure on a token's price. .
Total Locked Value (TVL) wars were another challenge facing DeFi protocols, which had to constantly compete for investor capital in order to maintain the number of “users” willing to lock their funds within the framework. of the protocol. This created a scenario where Mercenary Whale Capital and other cash flow investors basically airdropped funds to platforms offering the highest APY rewards for a short time, before finally dumping rewards. .
DeFi investing is riddled with potholes. Here are some tips to avoid them.
Newsletter
Welcome readers and thank you for subscribing! The Altcoin Roundup newsletter is now written by Big Smokey, Cointelegraph's resident newsletter editor. In the coming weeks, this newsletter will be rebranded as Crypto Market Musings, a weekly newsletter that provides analysis ahead of the curve and tracks emerging trends in the crypto market.
The publication date of the newsletter will remain the same, and the content will still focus on technical and fundamental analysis of cryptocurrencies from a more macro perspective in order to identify key changes in the investor sentiment and market structure. We hope you enjoy it!
DeFi has a problem, pump and voidWhen the bull market was in full swing, investing in decentralized finance (DeFi) tokens was like shooting fish in a barrel, but now that entries into the sector pale in comparison to the market's peak, it is much more difficult to identify good transactions in the space.
During the DeFi summer, protocols were able to attract liquidity providers by offering three- or four-digit returns and mechanisms such as liquid staking, lending via asset collateral, and token rewards for trading. staking. The big problem was that many of these reward offerings were unsustainable, and high emissions from some protocols led to liquidity providers automatically dumping their rewards, creating constant selling pressure on a token's price. .
Total Locked Value (TVL) wars were another challenge facing DeFi protocols, which had to constantly compete for investor capital in order to maintain the number of “users” willing to lock their funds within the framework. of the protocol. This created a scenario where Mercenary Whale Capital and other cash flow investors basically airdropped funds to platforms offering the highest APY rewards for a short time, before finally dumping rewards. .
What's Your Reaction?
