The crypto space’s decentralized finance niche has reached frenzied status within the crypto industry, signaled by exuberant price highs and rampant speculation.
“DeFi is the new overhyped concept in Ethereum,” MyEtherWallet, or MEW, CEO and founder Kosala Hemachandra told in an interview. “The noise is too much, so everyone is just like running around trying to figure out what the next big thing is and then putting a ton of money inside without doing enough research,” he said.
Back in 2019, DeFi likely brought to mind different concepts than what we see today. DeFi, at its core, existed as a way for people to borrow, loan and store funds based on their crypto holdings. Over the course of 2020, however, DeFi has ballooned, spurring projects created out of nowhere, gaining significant attention while speculators move their funds around in search of the best profit on coin price speculation and interest-bearing vehicles. Hemachandra’s comments refer to this newer hype movement.
The MEW founder explained that DeFi boasts losers and winners, with the winners adding further hype to the movement. As a byproduct of the hype, Ethereum network transaction fees have skyrocketed in recent weeks, at times costing users between $40 and $80 per transaction.
“That’s the main cause of the Ethereum gas price issue, as of right now,” said Hemachandra. He noted, however, that the present situation is an opportunity for the industry to scale up to the challenge and improve solutions around Ethereum, explaining that tension can spur growth.
Others have noted that another potential problem with DeFi stems from Ethereum’s low transaction-per-second numbers.