Is this how DeFi endsโฆ not with a bang, but with a whimper?
Since the May collapse, TVL in the entire industry has been essentially stagnant. Even for several months before the collapse, TVL had been stagnant.
We know macro conditions are atrocious. When rates were near 0% and money printing was en vogue, cheap dollars were getting dumped into DeFi. Now itโs the opposite. Dollars are being vacuumed out of the system en masse. Interest rates in the traditional economy are often better than DeFi.
Soโฆ is DeFi doomed? Should we all pack it up and go work for the banks? It feels as if DeFi innovation is still wildly more interesting than anything coming out of TradFi, and therefore would be a better bet for the long term.
Letโs evaluate this gut feeling with a bit more rigor. We break the question down into six categories where DeFi may be thought to have an advantage over TradFi, and subject each of these arguments to scrutiny.
High Dollar Yield: Draw
Crypto Asset Yield: Advantage DeFi
Composability: Draw
Convenience: Slight advantage, DeFi
Transparency: Advantage DeFi
Accessibility: Slight advantage, DeFi