Continue Capital: Why DeFi's Rally Is Weakening?

Why doesn't DeFi Go up?

Mark Ma is co-founder of Continue Capital

Why is DeFi not rising or rising fast?

The left hand public chain, the right hand DeFi, this is the keynote set last year, now have to add: Hengpi Web3, this is the direction of the program, firm three years do not waver.

Recently, the GameFi/NFT set the stage, the new public chain play, for Web3 we will talk separately later. The public chain is basically a market dream rate and relies heavily on the standard theory. If you value the public chain at $10 billion, then EVEN if I am a white paper on the public chain, HOW can I value it at $500 million? When Ronin of Polygon and Axie found a breakthrough direction with the side chain, it was a great catalyst for new people to rush into a public chain. The market finds that the demand after expansion is still huge, but the current ETH is not enough to support the huge daily users. When thinking about the Web3 theme, there was such a problem: if THE ETH 2.0 is fully delivered now, without any problems such as expansion congestion, what will the users do? I think the answer is becoming increasingly clear.

If we go back to DeFi, we can see that DeFi is still growing rapidly, but the growth curve is definitely not like Web3's 90-degree burst. In the future, DeFi users will definitely grow rapidly, but the marginal growth rate will slow down, which is one of the reasons.

DeFi users continue to grow and the curve slows

Second, if you look at the trading volume, CoinBase's daily trading volume was down to about 2 billion in the last few months, and UNI's daily trading volume was about 1 to 1.5 billion at the same time. Now CoinBase can probably recover to 4 billion, but UNI's daily trading volume is still 1 to 1.5 billion. The big three also face the same transition from growth stocks to Whitehorse value stocks. The core problem is the sequential growth rate. We know that the stock price =E*PE, the formula is very simple, is to determine the stock price of only two variables, one is profit, one is valuation, similarly, when the UNI trading volume unchanged means that the profit is unchanged, then the stock price to rise can only rely on the improvement of the valuation, if you have the impression of the currency exchange FTX/ Binance about the long-term PE is 5-10, It's going to be difficult for a while to raise valuations and raise expectations for sustained future growth, so UNI prices are basically Beta rising. With the UNI occupying 60% of the DEX market, the rest of the DeFi will probably be able to figure it out.

The top 10 billion

The proportion of DEX will continue to increase

Third, a rising tide requires continuous inflow of fresh water. DeFi has been developing rapidly for one or two years, and the basic core courses have been determined. It is already difficult to find projects that people are passionate about. The only variables are the derivative track, which is one of the reasons for the high hopes for Perp/dYdX. Now I enjoy manually brushing dYdX every day when I have time.

DeFi fundamentals regain lost ground

Therefore, there is no need to worry about the long-term growth of DeFi, the public chain DeFi basic plate layout, you do not need to worry too much, focus on the research of Web3, after all, there is the wild, the building has not become the new world of navigation.

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