YFI’s Andre Cronje: Greed & ‘A Whole New Ponzi' We Came Up With is Behind DeFi’s Insane Growth

Those behind DeFi’s successful projects know it’s all “fake exposure” that’s “not fair” but it isn’t the sustainable part, but Synthetix, Aave, Compound, and Chainlink ecosystem is which will be here when the greed is over.

  • “The current massive influx (in DeFi) is purely because of this new greed cycle that we've created seemingly out of thin air,” said Andre Cronje of yEarn.
  • Decentralized Finance (DeFi) is flying with more than $9 billion of total value locked (TVL) in this sector.

There is no doubt about the ongoing DeFi mania, which is glaringly obvious, especially in the way the unaudited protocols are locking in billions of dollars in less than a week of their launches.

Not to mention the skyrocketing prices of these DeFi tokens.

So, what is exactly driving this massive growth?

Greed is a pretty simple answer that has come right from the mouth of the horse. Cronje, the founder of DeFi darling YFI, the governance token of Yearn Finance in his interview with Chainlink said,

“I mean, the reason there's such a massive influx of money right now is because people are making money in insane amounts and the reason they're making money in insane amounts is because we came up with a whole new Ponzi.”

And the Ponzi, Cronje is talking about here is governance tokens, “which is this wonderful way where we give away free worthless tokens that for some reason people buy.”

The next wave then buys it so that the first wave can sell it, a cycle that then just keeps on repeating, while the token continues accruing more and more value.

YFI token gained popularity and a cult-like following for its most decentralized approach — zero supply, zero value, no VC funding, and no tokens allotted to the management.

The token hit an all-time high of $38,865 on August 31st, after its launch just over a month before that.

Also, “how economics work is that money comes to money,” shared Stani Kulechoiv, the founder of another popular DeFi protocol Aave.

It is “fake exposure” with those with capital deploying it in different protocols, minting tokens, and then selling them to those with only sufficient capital to buy them.

“It's not fair,” for sure, but this is like the financial system, and “that's how the market works,” Kulechoiv said.

The Real Thing

While all of this is making people wealthy by insane amounts, “it's not the sustainable part of DeFi,” said Cronje.

But underneath it, all are also the protocols that are accruing value like the Synthetix ecosystem, Aave ecosystem, Compound, and the supporting tools like Chainlink. He said,

“These are the real things accruing value because they're the ones that are going to be here in a year from now when this greed phase is over.”

According to Kulechoiv, in Synthetix or Yearn, one is optimization yields — using technology to get rid of efficiencies — and “that's like the real growth that is happening.”

There's substantial growth in things that we're building, but then there's the noise on top of them. It's a dilemma in finance because the noise will always be there when people enter into financial markets with less knowledge, and they have to pay for that knowledge by actually buying things from other people, explained Kulechoiv.

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

AnTy
AnTy
AnTy has been involved in the crypto space full-time for over two years now. Before her blockchain beginnings, she worked with the NGO, Doctor Without Borders as a fundraiser and since then exploring, reading, and creating for different industry segments.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3,511FansLike
2,795FollowersFollow
4,272FollowersFollow

Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today