- Ethereum’s DeFi sector resembles the early days of Bitcoin and presents unique opportunity for investors.
- The great profit opportunities in the Ethereum DeFi sector have attracted many investors in recent weeks.
The Total Value Locked on Ethereum DeFi has exploded again. Data from the DeFi Pulse platform puts it at $8.51 billion, after receiving the exorbitant figure of $1.5 billion in one day. In the crypto community, detractors continue to watch the development of Ethereum DeFi with reservations. Other members predict an industry-wide shift that could leave Bitcoin behind as the leading cryptocurrency.
In that regard, former head of cryptanalysis for Messari, Qiao Wang, urged not to miss the last two months of 2020 in the DeFi sector. Wang believes that this sector is going through its most lucrative phase for investors, but that this will only continue in the short term. In addition, he said the following comparing the DeFi sector to the initial years of Bitcoin:
From an investment point of view, BTC pre-2013 and ETH pre-2015 were once-in-a-lifetime asymmetric bets. DeFi pre-2021 is once-in-a-decade IMO (until proven wrong). If you’ve missed the first two, don’t miss the latter.
Wang added that investors should not be distracted by fake offers and products on Ethereum DeFi. So they should “try out a lot of products” before they get a sense of how the DeFi sector on Ethereum presents new user behavior. In the responses to Wang’s tweet, community members did not show consensus on his statements. Some welcomed them and others accused Ethereum of being a Ponzi scheme. User Udi Wertheimer, a critic of the DeFi industry, ironically asked Wang if when he talks about “once-in-a-lifetime opportunities” in 2013 and 2015 he means “lifetime of ants“. One user answered Udi:
Different ants. Ant 1 got filthy rich. Ant 2 missed it but got a second chance. Ant 3 missed both and might get it with ETH/DEFI. Life changing opportunities do not offer themselves often. Dont miss this one.
Will profits on Ethereum DeFi make Bitcoin less attractive?
On the other hand, CEO of the investment firm Pantera Capital took a similar position to Wang in terms of the potential offered by Ethereum’s DeFi. In a recent interview, Morehead predicted that the DeFi sector on Ethereum will offer greater returns to investors in the long term. Pantera’s CEO believes the market capitalization of the Ethereum DeFi is undervalued:
Bitcoin has a $250 billion market cap, and that’s great. It’s already achieved that. Whereas, the other use cases like DeFi are still just in their nascent state. DeFi has a market cap now of about $4 billion. If you’re looking at Bitcoin at $215 billion or DeFi at $4 billion, it seems like DeFi is cheaper, right?
In response to a prediction by an executive from crypto exchange Kraken that puts Bitcoin at $1 million, Morehead partially agreed. The CEO of Pantera Capital believes that such growth is more likely to occur in the Ethereum DeFi sector, noting that it offers more advantages to investors:
But DeFi, it could go to $400 billion. There’s no reason that couldn’t happen (…). I want to say we’re massively bullish on Bitcoin. We own a ton of Bitcoin, and it maybe could go to a million, but that is 100x from here and to me that’s really the edge of possibility.
Below you can watch the full interview with the CEO of Pantera Capital: