Prominent cryptocurrencies entrepreneur Changpeng Zhao shares his opinion on the fate of the majority of tokens issued by decentralized financial protocols (DeFis). Since the massive DeFi euphoria is nowhere near its end, this prediction does not sound like a regular DYOR disclaimer.
Most DeFis will fail, claims CZ
According to Mr. Zhao, the vast majority of decentralized financial applications and their native utility assets will go to Hades. However, some of them may bring amazing short-term gains.
Most of the DeFi projects will fail.— CZ Binance (@cz_binance) September 12, 2020
Some may offer short term gains, but they come with super high risks too.
Don't invest money that you can't lose.
All DeFi assets are subject to super high volatility. As a result, trading strategies that include purchasing DeFi tokens allow for very high risks of dramatic losses. CZ emphasized that traders should not invest money they cannot afford to lose.
He then added that this tweet is valid even with the word "DeFi" taken out. CZ proffered this caution amidst great criticism of Binance's policy toward DeFi coin listings. As the leading cryptocurrencies trading ecosystem in the world, Binance has listed a number of red-hot DeFi protocol assets, including DFI.Money (YFII) and SushiSwap (SUSHI).
After SushiSwap's anonymous creator, ChefNomi, abandoned the project with a 60% price drop, prominent analyst and trader Michael van de Poppe recalled that the identified leader of the project is a sine qua non for the Binance listing.
Interesting. pic.twitter.com/E76UGMntZD— Crypto Michaël (@CryptoMichNL) September 6, 2020
But is the listing of DeFi coins that crucial for Binance's business?
According to the most recent CoinGecko data, native assets of "yield farming" instruments are included in five of the Top 15 Binance trading pairs by 24-hour trading volume.
Four of the most popular DeFi trading pairs (YFII/USDT, YFI/USDT, YFII/BTC and SUSHI/USDT) combined are responsible for 12.85% of Binance's trading volume, while BTC/USDT volume constitutes 12.84%.
Furthermore, a Binance listing is crucial for DeFi tokens themselves. For example, Binance processed more than 40% of YFII's trading volume and more than 25% of SUSHI's trading volume in the last 24 hours.