Definalization Finance (DeFi) has made great progress this year. Bitcoin also achieved an amazing recovery from the depths of the encrypted winter at this time a year ago. But which one performs better in terms of long-term returns?
- Reuters: Netherlands' largest bank to enter digital asset custody industry
- Babbitt exclusive A-share blockchain concept stocks, the fastest growth rate of these 10
- Xiao Feng: Blockchain is not only a new technology, but also a new mechanism design.
- Paxos is approved to launch blockchain stock settlement platform, Credit Suisse and Societe Generale will participate in the first batch
- Why is Bitcoin unrepeatable?
- Max Keiser: Bitcoin’s “self-settlement” attribute challenges the dollar
Bitcoin vs DeFi
DeFi is a system that mortgages encrypted collateral in a decentralized smart contract controlled by a lending network. In a world where the current banking system has clearly collapsed, this is a new way of financing.
The DeFi platform is now springing up, and the scale of mortgages in 2019 has exploded and paid off. Ethereum has always been DeFi's preferred platform, and Maker has monopolized more than half of the market's locked assets.
TokenAnalyst examines the benefits of the Bitcoin and DeFi platforms so far this year. In the case of an investment of $1,000 on January 1, BTC's revenue was 133%, while ETH's revenue was only 36%. The benefits offered by the DeFi platform are even less.
If you invest $1,000 in 2019, (as of now):
– Investing in Bitcoin, you will receive $2,333 (+133%)
– Investing in ETH, you will receive $1,364 (+36%)
– Borrow on @dydxdigital and you will get $1,060 (+6%)
– Lend on @compoundfinance and you will receive $1,051 (+5%)
— Lending on @UniswapExchange, you will receive $1218 (+22%)
Risk and reward
It should be noted here that Bitcoin is highly speculative and highly volatile. Therefore, the investment risk is much higher, but the return is also high. The DeFi platform is not intended to be a high-risk investment vehicle, but is designed to replace banks that deliver higher returns, and has therefore been successful.
Bitcoin has been around for ten years, and DeFi is still in its first real year of growth. According to defipulse.com, the investment in DeFi has increased by 140% since the beginning of the year. Therefore, based on these figures, the decentralized financial (DeFi) ecosystem has grown faster than this year's bitcoin.
According to DAppTotal.com data, up to now, 33 DeFi projects have counted a total of 1.14 billion US dollars, including Maker lock warehouse 350 million US dollars, accounting for 30.08%, ranking first; EOSREX lock warehouse 345 million US dollars , accounting for 29.61%, ranked second; ranked third is Edgeware lock warehouse 155 million US dollars, accounting for 13.34%; Compound, Synthetix, dYdX, Nuo and other DeFi applications accounted for 26.97%. Up to now, the total number of ETH locks reached 3.364 million, accounting for 3.1% of the total circulation of the ETH market, and the total number of EOS locks reached 100 million, accounting for 9.69% of the total EOS market.
As the global economy suffers from heavy debt and interest rates fall, people will look for alternative forms of investment.
Locking digital assets in secure DeFi smart contracts typically yields 5% to 20% of revenue. Considering that Ethereum is currently the backbone of the entire ecosystem, further growth will also lead to an increase in demand for Ethereum, so the benefits may double.
Bitcoin will always be seen as value storage or digital gold, while Ethereum and DeFi seem to be forming a future for decentralized Internet currencies. When it comes to the financial system, the world is at the forefront of a huge paradigm shift, and the future clearly needs decentralization because the current system is clearly flawed.
Will DeFi continue to grow as the banking system collapses? Welcome to give your opinion.