Changpeng Zhao Warned Against DeFi Enthusiasm and Investments in DeFi Tokens

CZ warned against DeFi enthusiasm and investments in DeFi tokens

Founder and head of Binance Changpeng Zhao (CZ) issued a statement in which he strongly criticizes decentralized finance, DeFi.

Binance is expanding its functionality and now calls itself “the global blockchain company behind the world’s largest digital asset exchange”. Its head enjoys substantial influence and authority in the crypto world since he is developing the company with dynamics and has successfully overcome several crises in the cryptocurrency market. Now CZ sees a serious threat to the market in the popularity of DeFi projects. In his opinion, most of them live on empty promises and cease to exist 2 weeks after launch. In the field of DeFi, bubbles are multiplying, they will burst for sure and can cause distrust of the cryptosphere from those who invest in them. The head of Binance still hopes that the situation will stabilize naturally. Growth in the DeFi segment will slow and only “key players and innovative concepts” will remain.

DeFi projects began to grow rapidly after the market crash due to the coronavirus crisis in the spring of 2020. DeFi was positioned as a new trend in the development of the crypto market, as it transferred solutions from the field of fiat finance to cryptocurrencies. In particular, the possibility for crypto holders to lend and earn income from their cryptoassets, given to the lending pool. The owners of assets could get huge interest, reaching tens of thousands per annum. The excitement caused an unprecedented rise in the price of DeFi tokens.

The most famous case is the token YFI of the Yearn Finance platform, which has risen by 100,000%, from $32 to $44K in a month and a half from late July to mid-September. DeFi tokens UMA, TRADE, OCEAN also demonstrated thousands of percent rise. The case with the MEME token, which, according to the developers, was launched as a joke, with the purpose of ridiculing the DeFi hype, can be considered glaring. The token was distributed free with the airdrop. The joke was on. Initially, the price of MEME was about $10-40, but after listing on several exchanges, it soared to $1800. MEME is currently listed on Uniswap, Mooniswap, Hoo, Balancer, 1inch, and Poloniex.

For several weeks now, experts have been warning about the similarity of the DeFi bubble with the ICO bubble in 2017-2018. Then more than 90% of ICOs turned out to be a scam, more than $100 million were withdrawn from the market and filled the pockets of scammers. There are even direct matches. After the (SAFE) project was supported by the founder of Yearn Finance (YFI) Andre Cronje, the SAFE token rose by 625%, from $800 to $5000. Earlier Elon Musk jokingly praised the meaningless cryptocurrency Dogecoin (DOGE), it surged more than 75%, from $0.002089 to $0.003684 after that.

The coincidence of two situations in the cryptocurrency market is frightening, so experts are forced to directly warn participants in the cryptocurrency market about the danger.