Vitalik Buterin Warns Against Naive Bullishness in Defi Sector

Vandana  |  Sep 1, 2020

Vitalik Buterin, the co-founder of Ethereum has again taken to Twitter to warn the crypto community against the bullishness in the Defi sector. Along with this, he has also compared the economics of yield farming tokens with money printing by the Federal Reserve.

It is seen that yield farming is playing a huge role in providing liquidity to the users. Through this, they are able to earn interest in the form of tokens which has ultimately accelerated the Defi boom.

Seriously, the sheer volume of coins that needs to be printed nonstop to pay liquidity providers in these 50-100%/year yield farming regimes makes major national central banks look like they're all run by Ron Paul.

Buterin highlights aggressive supply inflation of governance tokens 

In his recent tweets, Buterin has also highlighted the intense supply inflation of the governance tokens. This ultimately puts pressure on the prices of all those coins that are printing continuously. This has been done to pay liquidity providers. He said, “Seriously, the sheer volume of coins that needs to be printed nonstop to pay liquidity providers in these 50-100%/year yield farming regimes makes major national central banks look like they're all run by Ron Paul.”

Not only Buterin there are other people also in the crypto community who are of similar thoughts. On his recent tweet, a twitter user has responded by pointing at yield farming as a Ponzi scheme. However, another crypto user claimed that new crypto startups will always come up with some real potential in the sector.

Not a plausible path for many new projects

Buterin has also mentioned that he is not seeing a plausible path for most of the new projects that are aiming to generate cash flow. He also mentioned that if a project needs to sustain for a longer period then there is a high need for fee-generating applications. It is seen that these comments by Ethereum co-founder might be for SushiSwap decentralized exchange and yield farming platform. Over the past weekend, the platform has been gaining great popularity.

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