Cryptocurrency

DeFi

The Future of Finance

Where did we come from and where are we going?

| Degen Ping | 5 min read

Very little of what was built in the Summer of DeFi lasted.

The greatest crypto cycle to ever occur began with the adoption and spread of Decentralized Finance protocols, as the masses were introduced to yield farming, onchain lending and governance tokens. It was the first use case in crypto outside of payments, and a story believable enough for most institutions to come in and place bets on it as the future of finance. Most importantly though, it was fucking fun. Aping into 4 digit apy yield farms, doubling your money in minutes, dumping on newbies, risking it all on potential rugs, liquidating bearish whales onchain - it was truly the most entertaining period I’ve had in crypto. It also wasn’t bad for my net worth, as I hit portfolio all time highs in the summer of 2020, despite having invested in crypto since mid 2013.

In the end, the high riding, mega apy yield farms, to pumpamentals fueled “governance” tokens, (3,3) ponzis, algo “stables”, and ethereum “killers” rugged retail and sophisticated crypto natives out of their daydreams in addition to their hard earned shekels.

This past three year bull cycle was a time where nearly everyone fell for the mirage, hard. The storytelling felt real, the vibes were lit, and the ponzis seemed sustainable. Number-go-up (NgU) was pure entertainment, especially during the covid lockdown, and our paper networth going vertical converted nearly all of us into supercycle believers - causing even crypto OGs to forget the true nature of the game. It was the blind leading the blind, and no one could find the elephant in the room.

In the end, the collapse of some of the largest players in the space was the awakening to the true nature of our reality. This cycle was like any other before it and NgU turned out to be impermanent. The optimism for the future turned to cynicism as people went from tweeting “web 3” to telling people to go out and touch some grass. It was the perfect ending to a fairytale run: The largest centralized platforms in the space turned out to be insolvent scams, Powell lifted rates to the highest it’s been in decades, and the covid lockdowns around the world all lifted at once. The bears were right, it was all going to zero.

Alas, it turns out the core function of crypto was entertainment and community. Its accessibility, ease of adoption, unregulated nature and storytelling has made it an amazing speculation vehicle - but that is secondary to user enjoyment. NgU gives us pleasure, but it only comes with narratives that people around the world must believe in. In the current state of the market, with the rugs, liquidity hunting on derivatives, repetitive pumps and dumps on smallcap altcoins, there’s not much fun out there to be had in the market today.

So what sparks the next big run?

Currently, it seems we are in the casino arc, where most of the enjoyment comes from betting in online casinos and obscure microcaps. Unfortunately, none of this is novel enough nor captures enough user interest to lead to a new cycle. Innovation in some way is required - a new way to speculate that brings entertainment, NgU and the crypto community together. I believe the medium that will lead crypto into the next arc, like DeFi and NFTs before it, will be Risk-to-Earn (R2E) GameFi / GambleFi.

Degen-ery is the past, present and future for crypto. I don’t believe any amount of institutional “adoption” or money will change that - as we saw instead of the suits taming our markets, we cryptofied the world’s financial system as blue chip stocks now trade like shitcoins.

Trends don’t reverse quickly - it’s clear that the future of “web 3” is innovation in zero sum games, and it needs to be novel, entertaining and community engaging. Imo, R2E GameFi is the next frontier that will shape crypto for the next cycle - the very best of DeFi ponzinomics, NFT items and characters wrapped in casino-like gameplay.

The games that understand the nature of crypto, the mechanisms behind NgU of successful DeFi and NFT projects, and the entertainment natives and OGs seek will usher in the next crypto cycle, establishing an new era of crypto’s original use case appealing to degens around the world.

Stay tuned for part 2.


Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions. As always, please do your own research. This is not financial advice. Every strategy is not for everyone. Each investor needs to understand what is right for them.


Twitter: @DegenPing | OG Meditatooor | Asian Art, Puerh Tea Collectooor | @DegenScore | @TridentDAO | OnChain Gaming