Since the bull run of 2020–2021 came to an end, the section of decentralised finance (DeFi) protocols has matured. What it means for investors in general, VCs, token holders, and consumers is as follows.
“Blue-chip DeFi (or anything) was meme last cycle”
Every “blue-chip” altcoin was nothing more than a meme during the most recent bullish run in cryptocurrency (Q1, 2020–Q4, 2021). None of them were able to begin producing a steady stream of cash flow for their token holders and investors. According to Vance Spencer of Framework Ventures, every successful protocol was surrounded by several forks funded by venture capital.
This mismatch between the massive hype around “blue-chip DeFis” and the meagre value flow made “vampire attacks” viable. The first such assault, which was previously documented by U.Today, occurred in September 2020 when the then-new DeFi SushiSwap (SUSHI) overnight syphoned $1.4 billion of Uniswap (UNI) liquidity.
Chef Nomi, the enigmatic developer of SushiSwap (SUSHI), promised stronger conditions for “yield farming,” i.e., more generous liquidity provider compensation, amid the excitement around 2020 DeFi coins. As a result, LPs began abruptly discontinuing Uniswap (UNI).
Such marketing ploys won’t succeed in the forthcoming bitcoin cycle, according to Spencer. Today’s bitcoin market is about substantial markets and actual cash flows.
Who will join FAANG of DeFi in 2023-2024?
VCs will not be interested in sponsoring arrays of “new-gen” blue-chip DeFis since many “queens for a day” are simply no longer available. This will lead to consolidation since only the most powerful actors will be able to draw in liquidity and create tokenomics that are well-balanced.
This consolidation may, in some ways, result in the creation of the “FAANG of DeFi.” Top DeFis will reach the domination generated in the Web2 digital world by Facebook, Amazon, Apple, Netflix, and Google.
According to Vance Spencer, who has previously been featured by U.Today, Bitcoin ETFs will be approved by the end of 2023.
The analyst claims that this declaration will also open up enormous prospects for other significant cryptocurrencies.
