One million New Taiwan Dollars for one token? YFI founder: DeFi explosive growth driven by greed

At the end of July, the total value locked (TVL) in DeFi was around $3.7 billion. Now, just a month later, the locked value has doubled to $7.84 billion. Not only has Ethereum's founder raised concerns about the excessive enthusiasm in this field multiple times, but even the founders of mainstream DeFi protocols like YFI, Aave, and Synthetix believe that the current DeFi frenzy is primarily driven by greed.

Can the DeFi Boom Last?

The first Smart Contract Summit hosted by the oracle project Chainlink, known as "Smart Contract Summit #0", took place on the 28th and 29th of this month, with invited participants including various DeFi protocol founders such as:

• yearn.finance founder: Andre Cronje
• Synthetix founder: Kane Warwick
• Aave CEO: Stani Kulechov

When asked about his views on the explosive growth of DeFi, Cronje pointed out the phenomenon of participants over-investing in governance tokens:

The reason why there is such a large influx of funds is that users are making crazy money. Their frenzy of buying and selling governance tokens has led to this prosperity. This is not a sustainable phenomenon for DeFi. When the "greedy phase" ends, valuable protocols such as Synthetix, Compound, and Chainlink will still exist.

Cronje's perspective is evident in his governance token yearn.finance YFI, which not only broke historical price records on the 28th, but today reached a price of $34,644, ranking 26th in overall market value.

Stani Kulechov, CEO of decentralized lending protocol Aave (LEND), also agrees with Cronje's views and subtly criticized certain protocols:

What concerns me is that although DeFi protocols are developing rapidly, some projects are starting to focus on making money quickly, similar to the traditional banking system that everyone has been trying to break away from. I am pleased to see users using Aave, and the way to prevent DeFi protocols from becoming too large is to allow various protocols to collaborate seamlessly.

Speculation Limited, Potential Unlimited

Kane Warwick, founder of decentralized synthetic asset exchange Synthetix, was also one of the speakers at the online summit. He acknowledges that part of DeFi's glory is due to the speculation on governance tokens, but believes that DeFi still has great potential and is fulfilling its role. He stated:

The traditional system is being redesigned as a decentralized financial system, and we are in the midst of it. As long as participants allocate the right time and funds, anyone can reap rewards from it.

In fact, Ethereum founder Vitalik Buterin has also expressed concerns about the potential risks of smart contracts that most users underestimate, as well as the "unsustainability" of DeFi liquidity mining. He believes that it is not sustainable to rely on coin issuance and mining to attract users to the ecosystem indefinitely.

It is worth noting that although the total locked value of DeFi protocols has reached a historical high again, with one YFI coin exceeding one million Taiwanese dollars and surprising many, the number of active user addresses in DeFi has dropped to a low point since early August, which may indicate a slightly exhausted market.