Will DeFi Turn Its Back On Ethereum As ETH Fees Continues To Soar?
The much-hyped YAM tokens plunged 99.9% after a severe bug was discovered in the asset. Earlier this week, the market capitalization of YAM went as high as $600 million; it has now collapsed after an exploit of more than $750,000. The market cap is collapsing to as low as zero.
It is dragging down the price of other DeFi protocols as well, Jack Purdy, research analyst at Messari Crypto tweets,
When one protocol changes incentives it has a series of cascading effects across asset prices and lending rates across a number of markets
Top 5 DeFi Tokens Price Update
On the other hand, Ethereum [ETH] bulls are looking to shrug past this hurdle – the collapse of an isolated DeFi project. At the time of the revelation of the flaw in YAM, Ethereum dropped more than 4.1%. Nevertheless, has bounced back above $390.
There is considerable awakening in the markets right now, participants have acknowledged the abnormality of the returns and probably have their risks hedged. Still, the return from the token economics and yield farming is too high for even some institutions to not participate. Purdy added,
With the CRV launch on the horizon, YAM 2.0, and any other planned or seemingly impromptu yield farming opportunities that arise New sources of hidden alpha will ever-present if you know where to look
Adoption Over Fees
Midst the DeFi boom, the price of Ethereum fees is skyrocketing to new All-Time Highs. The probability of shifting over to other smart contract platforms is increasing as well. Jay Hao, the CEO of Okex, hints at the possibility of this transition. He tweeted,
#Ethereum galaxy is dominating the #DeFi space ITM farmers are suffering from skyrocketing gas fee. If you have to choose an alternative, which blockchain infrastructures are on your list to build DeFi solutions?
Currently, the GAS price is over 230 Gwei, as mentioned yesterday this value is significantly high for the users.
Nevertheless, as the ecosystem continues to thrive, in fact, DeFi yields and transactions continue to increase. Mati Greenspan, financial analyst and founder of Quantum Economics, sees it as a bullish sign as adoption takes precedence over fees. He tweeted,
Transaction fees on #Ethereum are less than 3 cents away from their all-time high.
The number of transactions per day is also way up so clearly people are happy to pay for the service. Overall, I’d say these are bullish fundamentals as the network is now retaining more value.
How high do you think the GAS fees can go? Please share your views with us.
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