DeFi Products May Be Inappropriate for Retail Users. VanEck’s Gabor Gurbacs Explains Why

Collapse of YAM DeFi challenged the concept of "yield farming" as a reasonable income strategy. Moreover, it may damage the reputation of the entire crypto space

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Prominent expert Gabor Gurbacs, chief digital assets strategist at VanEck investment management giant, explained why the drama around YAM's rise and fall may go far beyond the collapse of a single protocol.

Reputation of crypto is at stake

Mr. Gurbacs outlined that some decentralized financial ecosystems are too insecure for retail traders, let alone for crypto newbies. He offered four reasons for staying away from the DeFi sector:

Hyper-leveraged, over-hyped, lightly-tested, unaudited DeFi projects may not be appropriate for retail investors. Makes me sad to see the reputation of the crypto space destroyed. Sticking to “Bitcoin not crypto” has been a good rule of thumb to save newcomers from ruin.

According to Gurbacs, decentralized applications that attract nine-digit sums in U.S. dollar equivalent are typically released with no security audit. However, the enormous euphoria around the segment allows their teams to abuse hype to attract clients.

The modus operandi for some protocols leads to "hyper-leveraged" risks for their clients. Finally, engineers deploy the protocols and their forks after "light" testing only.

The light-mindedness of DeFi developers may cost the entire crypto segment its reputation, Mr. Gurbacs admitted.

Start from Bitcoin

Finally, the expert recalled the old mantra of Bitcoin (BTC) maximalists: "Say Bitcoin, not crypto." This approach may be useful for blockchain newcomers and can prevent them from dramatic price collapses.

Mr. Gurbacs expressed his concerns following the drastically rapid fall of YAM decentralized financial protocol. It attracted almost half a billion dollars from "yield farmers."

👉 MUST READ YAM Protocol Collapses, Token Goes to Zero. Why Did This Craze End in 24 Hours?related article image

As covered by CryptoComes, the critical bug plagued the rebasing mechanism of the protocol. So YAM protocol stopped its operations with YAM token down 99 percent from yesterday's level.

YAM token down 99% in 17 hours
Image by Coingecko

On Aug. 12, the launch of YAM was celebrated by many crypto speakers, including BitMEX CEO Arthur Hayes. He admitted that he joined the army of "yield farmers" for the first time.

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Vladislav Sopov

Blockchain Analyst & Writer with scientific background. 5+ years in IT-analytics, 2+ years in blockchain.

Worked in independent analysis as well as in start-ups (, Monoreto, Attic Lab etc.)