Is Decentralized Fiannce Dead? Can You Still Profit in Defi Projects?

Data & Research / 19.11.2020

Defi platforms have, in the past few months, been seeing drops in prices, and the episode has been growing for some time. Some media’s token prices plummeted by half, and the decline is continuous every day; others partly lost their customer base. 

In some instances, in just one day, Defi’s growth showed a massive decline. Uniswap just recently lost over $1.5B (TVL) in just 24h. Another report showed that the general Dex market’s trading volumes dropped from 8 billion US dollars to 3 billion US dollars in September. Moreover, the smart contract hype is lowering, and investors are mostly directing their attention to BTC rather than Dex.

But why have the prices been dropping? Is this the death of Defi, or will Defi rise again? Can anyone benefit from Defi trading? Keep reading to get more insight.

The Case Against Defi

Some suggest that there are severe transaction fees for these smart contract dependent platforms. Although the initial plan was to have these Defi services offered at low prices (the cent level), the prices are currently at the dollar level. 

Moreover, there is a notion that the platforms are overcharging for services that have low demand. There are high transaction fees charged even for betting Defi platforms, and many such players prefer to shun away from betting.  

An Exaggerated Death

Most experts use the statistics to insinuate that the Defi world is dead and gone for good; however, that is not the case. For instance, the Defi sector is still in its early stages of any business cycle, therefore predicting its death is an exaggeration. An in-depth look into Defi, its life-cycle, and even the statistics will also prove that this is just a short term problem, which will end with a Defi hype. 

For instance, although the trading volumes and tokens prices have been plummeting, the total value locked in the Defi world has surged in a few weeks. A few weeks ago, the amount was about 4 billion US dollars, but the value currently stands at 13 billion US dollars. The TVL current values are a record for the Defi network, and as such, there is still an influx in confidence levels from customers. 

Another thing to consider is the increasing number of Defi platforms. For instance, several token sales have been completed between September and November, amid the plummeting prices. Even with the rising challenges, investors are continually growing their interest in the platforms, thus giving the media significant backing. 

The Defi world will soon rise, and as such, this is the best time to purchase the currently trading tokens.

Profiting in Defi Trading

Although Defi networks are under speculations of dying, speculations that do not reflect the reality, there are ways you can make profits now and in future Defi. However, it would be best to get a good idea of where, when, and how to make these profits. Here is a short guide on how to ensure you make profits in investing in Defi projects. 

Do Proper Research

Before putting your money in any new or already existing and profiteering Defi project, or token, you should start by researching. Most investors blindly invest after hearing that other investors gained good profit from investing in a particular project’s token sale. However, doing your analysis of the tokens and the Defi networks will help you achieve your target investment prospect. 

The analysis involves looking deep into the token economy’s basics, the team’s experience, the partnerships, market, roadmap, and any other thing. If you notice any issue with the valuation(maybe over or undervaluation) and the analysis above, you should probably rethink your investing.

Moreover, since many platforms provide charts and tables to help track token performance, a look into those will help you know the right investment. There are Defi trackers that help traders learn about the latest promising crypto assets.  

Identify The Best Investment Options

The aim of doing research is to get comprehensive information about different coins and Defi platforms. Using the data collected, you chose to invest in an asset with high chances of appreciating. It’s not easy to spot assets with excellent prospects; however, if you manage to spot one with a good promise, you will have a guaranteed rewarding investment. 

Look at the investment option of your choice; when is their public token sale? The public sale is the best time to invest in any new token since, at that point, the tokens are at low values. Moreover, there are coins with different funding methods like dynamic coin offering(DYCO) and strong holder offering(SHO), all of which have great returns. 

Order and Manage the Asset

After choosing your asset and its trading pair, look for the best exchange platform which has your trading pair. Platforms like Coingecko and Coinmarketcap can give you an insight into the best exchanges. An exchange platform’s viability depends on its liquidity, reputation, security, trading fees, etc.

Since the crypto world is highly volatile, you need to set a reasonable stop loss for your assets price swings after purchasing your coins. However, when in profit, it’s fair to consider using a trailing stop order to keep you profiting. 

Final Word

There have been increasing talks about the Defi world’s possible death, with Defi coins plummeting in prices and the platforms losing customers. Many say the reason could include the ballistic transaction fees in Defi platforms. However, looking at those one-sided statistics does not give a complete view of the Defi platforms’ position. The currently growing TVL proves that consumer usage increases and proves that consumers are increasingly boosting their confidence in Defi.

But how can anyone benefit from Defi? Foremost, before investing in any Defi network, a user should do thorough research and analytics of the token and future. The study will help choose the best token and platform with the best prospects. Later, you should order assets with top security, fewer trading fees, and better liquidity. 

Adam is an outgoing young lad who likes adventures and discovering new things. Despite his boring life, he loves writing about cryptocurrencies and exploring what blockchain technology can do for the coming digital world where all adventures will be virtual.