Buterin sounded the alarm over excessively high inflation of DeFi tokens
5 undervalued DeFi coins to turn $1k into $100k! (deep analysis)
Ethereum Co-Founder Vitalik Buterin Compares Majority Economy DeFi protocols with a money machine that continuously prints new tokens for liquidity providers.
He believes that the aggressive digital asset allocation strategy of many projects (Yield farming) to ensure annual returns of 50-100% is irresponsible, since oversupply increases inflation and puts significant pressure on the price..
Buterin also warns against the naive optimism of long-term investors. He points to the inability of many startups to generate cash flow without the availability of paid applications, which will ultimately lead to the inability to maintain the cost of the project and pay commissions..
Expressing your pessimistic attitude towards such a strategy, he compared it with the monetary policy of central banks, which print money without stopping.
The rise in popularity of DeFi has also led to higher Ethereum network utilization and transaction fees, which boosted the profitability of miners..
text: Ivan Malichenko, photo: magspace