Many analysts said recently, to the center of the financial (DeFi) has quickly become one Ethernet Square “killer application”. And DeFi is now known as a sub-industry, with a locked value of nearly $1 billion, and some of the industry’s most prominent investors and innovators.
Jacob Horne, a product manager at Coinbase, said at the DeFi conference late last year: “DeFi or decentralized finance is an important part of an open financial system. DeFi tools are censorship-resistant, unbiased, programmable and can be used on any smartphone People. For this hackathon, we are committed to bringing DeFi to the world.”
Recently, DeFi’s adoption trend seems to have been increasing speed.
Just last month, when an investor used a multi-million-dollar bitcoin token in the MakerDAO agreement, a DAI stablecoin worth $4 million was mined . This transaction is notable because it marks the largest use of BTC in DeFi to date .
“4 million Dai can be minted from WBTC in just one transaction. This does indeed show the potential demand for non-ETH assets. This is the beginning of the broader trend of DeFi as a financial product and will eventually attract almost all the value of Ethereum”, MakerDAO Founder Rune Christensen wrote in a recent tweet.
However, according to a famous investor, DeFi may temporarily be in a “stable” state due to obvious delays.
Ethereum’s killer apps tend to be stable
Kyle Samani, managing partner of Multicoin Capital, published an extensive blog post on June 4 that outlines why DeFi “faces some practical challenges” and therefore may stall in the short to medium term.
Leading cryptocurrencies and blockchain funds are no strangers to DeFi: the company has invested in this area, making their comments targeted and not serving their own interests.
Samani explained in the post that at present, there is an obvious “delay” problem in the DeFi space, which limits its wider adoption.
“You just can’t build a global-scale trading system for many users on the POW chain. It just doesn’t work. Because high latency causes various negative effects. Therefore, I think that before solving the core latency problem, use ETH (instead of In terms of DeFi measured in US dollars, we are currently close to stable.”
This is mainly by reference in Tai Square, about 13-14 seconds blockade time , which means that traders can only be the fastest to the center of trade during this period.
For most consumers, this is fine. But for advanced users who make large transactions with money, this delay may have a significant impact on their profits, thus hindering the adoption of DeFi.
The relatively high transaction costs of Ethereum also hurt DeFi adoption in the short term.
According to Ethereum’s Gas data website, since the beginning of May, the cost of sending transactions on the blockchain has actually tripled in the past month. Routine transactions for ETH may be cheap and much cheaper than Bitcoin, but DeFi transactions may start to cost some dollars for certain functions, thus limiting adoption.
DeFi is currently at risk
Even some of the biggest proponents of Ethereum are currently skeptical of the decentralized finance sector.
Adam Cochran, a partner at Metacartel Ventures and an adjunct professor of information science at Conestoga College, explained in April that DAI stablecoins pose a “survival threat” to DeFi.
Don’t misunderstand Cochran, he is actually very optimistic about Ethereum and DeFi, although he observes that there are many obvious problems with the work of such applications.
The investor explained that because all DeFi agreements use DAI, and because of the concentration of MakerDAO governance that manages tokens, assets are not fully concentrated, so the risk is getting higher and higher.