DeFi

DeFi founders using DeFi to buy mansions is not the problem

Published

7 months ago

14 June, 2024

DeFi founders using DeFi to buy mansions is not the problem

But something is wrong with the lenders’ settings if a single entity can borrow against 30% of a token’s market cap.

Every now and then I see people in crypto – this open, decentralized ecosystem based on market economics – suddenly turning into communists saying that founders shouldn’t get rich and buy mansions.

The problem is not that founders get rich and use DeFi protocols within their established parameters to use that wealth.

This is because DeFi protocols need better parameters.

Curve Finance founder Michael Egorov took out approximately $100 million in stablecoin loans collateralized by $140 million of Curve’s CRV token. The risk of its loans being liquidated had loomed over DeFi for months and this week it finally happened. Egorov was liquidated.

Some takeaways from this.

DeFi doesn’t care

The first is that it turns out that the massive loans backed by Egorov’s CRV did not pose as huge a risk to DeFi as previously thought.

The concern was that if the price of CRV fell enough that Egorov could not provide the additional collateral needed, then that CRV collateral would be liquidated, and if the loans are not repaid, this would leave DeFi protocols with debt debt. through five different DeFi lenders who had Egorov’s positions.

It’s important to note that the $140 million in collateral represents approximately 30% of CRV’s market capitalization, meaning it would be difficult to sell that much CRV on the open market to cover these loans. This single individual had therefore begun to present an almost systemic risk to DeFi.

But this dreaded scenario happened and beyond the CRV crater, DeFi lenders remain in good health overall. Lenders’ TVL, collateral ratios and lending rates all remained stable throughout Egorov’s liquidation.

Egorov cashes in

Then some people are sounding the alarm that Egorov is taking out massive loans against his token and even blaming him for buying a huge mansion.

In my opinion, Egorov should be able to get rich from founding Curve and cash out his CRV stack, the same way Web2 founders get rich from their company’s equity.

A small difference here is that Egorov, instead of selling the CRV, took out loans against it, and now that the CRV has been liquidated, this was an indirect way to sell.

What I think could be criticized is how quickly he started to cash in. Typical founder vesting schedules last 4 years with a one-year cliff. This means that founders cannot sell any shares during the first year after obtaining them. After the first year, they begin vesting their shares on a monthly or quarterly basis over the remaining three-year period.

In the case of CRV, the token was launched in August 2020 and as early as December, Egorov started borrowing on Aave. Still, borrowing against tokens isn’t exactly cashing out, and one could argue that liquidations four years after launch roughly match the average vesting schedule for founders.

Better rules

I don’t think the right idea here is that DeFi founders shouldn’t use the very infrastructure they built and the tokens they launched to borrow more crypto. They simply use DeFi, follow DeFi rules, and pay market rates. There’s nothing wrong with that.

I think the problem here lies in what these DeFi rules are.

There is definitely something wrong here if someone is able to put up 30% of a token’s total market cap as collateral, especially for tokens that don’t have enough liquidity to be able to find buyers worth this guarantee within a short period of time.

So, even though all lending protocols take into account their own lending ratios, we should take advantage of the fact that DeFi is completely transparent and ensure that lending protocols also take into account overall lending ratios. What is the total collateral and total loans taken out against assets across DeFI.

Onetruekirk, the founder of Credit Guild, also makes this point. It recommends that when global leverage ratios become risky, protocols gradually change the parameters, including setting the loan-to-value ratio at zero, gradually increasing the liquidation threshold, and increasing interest rates.

So now that this Egorov liquidation threat has come true, DeFi remains strong, but lenders should learn from this fear to de-risk the ecosystem.

Fuente

DeFi

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Published

6 months ago

29 July, 2024

CoinFlix Staff

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Bonk and Pepe appear set to net new investors 10x to 100x returns over the next 12 months. However, cryptocurrencies in the DeFi play-to-earn gaming sector could offer even greater returns. As August approaches, Rollblock is emerging as a standout DeFi play-to-earn gem with the potential to 100x-1000x gains in the fourth quarter and beyond.

The project features an innovative revenue sharing model and exceptional accessibility, attracting players and investors. Additionally, Rollblock’s extensive game library of over 150 titles and enhanced sports betting are further driving excitement for the platform. Cryptocurrency analysts are expecting a sudden surge in demand. 800% a push for Rollblock from the beginning of September.

Bonk remains strong despite market fluctuations

While most well-known cryptocurrencies struggled throughout July, Bonk remained strong. As one of the highest-grossing meme cryptocurrencies of 2024, Bonk rose over 24% in July, while most cryptocurrencies experienced negative fluctuations.

Investors looking to add a relatively safe memecoin to their portfolio should consider Bonk. While Bonk is unlikely to generate explosive gains of 250x to 1,000x from here on out, Bonk could still theoretically provide returns in the 20x to 100x range.

Pepe should see a big rise in the next bull run

Alongside Bonk, Pepe has yet to go through a bull run. This means that there are still substantial gains to be made from Pepe over the next 12 months.

Pepe is down 4% in 30 days, but that shouldn’t worry Pepe investors in 2024. Experts believe Pepe’s best days are still ahead, with crypto analysts predicting a 10x to 50x surge in the next election cycle around November.

In the long term, Pepe could surpass the 100x mark for today’s investors. However, Pepe is a memecoin, and one should exercise caution when investing in purely speculative assets that have no utility.

Rollblock’s Unprecedented Hype Potential Could Push It Past 100x Valuation in Q4

Rollblock is a GambleFi Play-to-Earn token that integrates centralized and decentralized gambling on a single platform. By allowing players to earn rewards through active participation and gameplay, the platform creates a compelling incentive structure that appeals to both casual and competitive players.

With its cutting-edge blockchain technology, Rollblock offers top-notch security that keeps bets and transactions on the platform secure. The platform’s lack of KYC mandates appeals to both users who value anonymity and security.

Rollblock’s revenue sharing model, which allocates up to 30% of casino revenue to RBLK token holders, is a major draw for investors. The model involves burning half of the repurchased tokens and distributing the other half to stakers, increasing the token’s value and encouraging long-term investment.

The platform is also constantly evolving thanks to user feedback which has enabled updates such as the upcoming sports betting feature within the platform’s casino. This addition will complement Rollblock’s extensive game library of over 150 titles, ranging from traditional poker to innovative blockchain-based games.

RBLK is expected to emerge as one of the leading DeFi tokens in 2024. With a price of $0.0172 with impressive growth potential and over 140 million tokens sold recently, Rollblock is on track to enter the top 100 cryptocurrencies by Q4, making today a lucrative time to buy RBLK tokens.

Discover the exciting opportunities of the Rollblock (RBLK) presale today!

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Fuente

DeFi

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Published

6 months ago

29 July, 2024

CoinFlix Staff

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Veteran cryptocurrency investor Arthur Cheong believes the digital asset sector offers long-term holders a golden opportunity.

Cheong, the founder of DeFiance Capital, tell His 171,700 followers on social media platform X indicate that he believes decentralized finance (DeFi) is hugely undervalued.

According to Cheong, DeFi projects are innovating at a rapid pace and leaving traditional financial (TradFi) companies in the dust.

“It’s been a long time since I’ve been this excited about the risk/reward and potential upside of DeFi. This is probably the most misjudged moment since the pre-DeFi summer of 2020, with extremely promising prospects.

I see opportunities not only in OG (original) DeFi, but also in some newer projects that are evolving rapidly and growing at a pace that fintech startups will do anything to match.

The veteran investor also believes that crypto is now here to stay following recent launch from the Ethereum spot market (ETH) exchange-traded funds (ETFs) last week.

“Overall, the floodgates are open and there is no turning back. TradFi asset managers will continue to launch new crypto products because, guess what: there is huge demand for them!”

I expect them to launch actively managed crypto ETFs [in the] coming years. ”

Earlier this month, Cheong laid that it might be a bad strategy for cryptocurrencies to seek mass adoption, believing that digital assets are designed to disrupt several key financial sectors.

“I think we should accept that cryptocurrencies may not be suited for mass adoption like Web2, but rather are optimized for some narrow but very high-impact use cases like stateless global money, cross-border payments, and decentralized finance.

Chasing mass adoption of normies may be chasing the wrong Grail from the start.

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