Big DeFi returns paint sharp contrast to flagging traditional markets

Posted: 7 August 2020 7:29 pm

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There are two completely different economies today, and soon they'll cross paths.

The stock market remains near its all-time highs, which some analysts somewhere are probably saying is a sign that traders have already priced in the economic recovery.

"The market has signalled that it's not overly worried by the upcoming period of record US unemployment, mass homelessness, persistent civil unrest, pandemic and staggering inflation," a chipper hypothetical newscaster says. "Now let's look at some medtech stocks for companies no one's ever heard of which are up 10,000% because they might have something to do with a coronavirus vaccine two years from now."

You don't need to be an expert or use any numbers to plainly see that most major stocks are simply overvalued right now and that there will be a readjustment.

Bond buyers are certainly realising it, with US government bond yields now at a cool 200-year low, according to Deutsche Bank.

"If only there was a better way!" cries the investor as they sloughed another bucket of cash into safely negative returns.

Real estate may be in a similarly tricky spot. The stays in evictions and drying up of rental income in the face of the economic crisis, to say nothing of an uncertain future of travel bans, is seeing many people attach their wealth to empty buildings and land, in the hope that the neighbourhood doesn't de-gentrify in the coming years and that people don't persist in working from home away from the cities.

It's an uncertain bet.

Gold is doing well though. It's up about 5% this week as a result of there being more people buying gold than selling it.

Meanwhile, in the real world

Elsewhere, Ampleforth inflates and explodes, showering the decentralised web with money. Dozens of new millionaires pop into existence. The crowd applauds.

The yield farmers till the fields for compound returns on USD stablecoin holdings averaging more than 100% a year, while the less agriculturally inclined earn similar wins just by tossing their coins into a pool.

Someone buys coins on an exchange, then presses a button saying "stake now". Those coins whir to life and start pulling in 15% per annum. Then their price doubles just for the hell of it.

The low coins have multiplied in price, while the big caps are flourishing too in their own way and everywhere you look in cryptocurrency you see people glad not to be stuck with the greyness of fiat.

By now, you can almost hear the money flowing through cryptocurrency like water finding its way from the roots of a tree to every leaf.

Pretty soon the two worlds will meet.

Confused? Read the beginner's guide to DeFi.

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Disclosure: The author holds cryptocurrencies including LINK at the time of writing

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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