Will Ethereum Remain The Google of DeFi?
Last Updated on 16 November 2020 by CryptoTips.eu
Venture capitalists found their Waterloo at the end of the 1990s. As the internet started to take hold and became widely accepted, some of the companies that they had invested in started to see their stock market value rise. Californian Venture Capitalists worked together with banks to get many of the so-called “dot com darlings” launched, among them the infamous Pets.com and America Online.
Crypto Analyst Expects Ethereum and DeFi to Go on a “Stupid Run” https://t.co/zYBnSyf8qZ
— accurate (@accuratefintech) November 14, 2020
What happened next became one of the greatest bubbles of all times. Some of these firms lost some 90% of their value during the stock market crash of 2000 until 2001 when investors realized it would take decades before they would actually start making money. One of the few that remained, such as Amazon.com, eBay, and Google, saw their competitors wiped out. Thanks to a good growth strategy, they gained market share and came to dominate their respective area of business, whether it was search or online shopping. Two decades later, the most valuable public companies are still to be found in the technology sector. The survivors of the dot com bubble remain.
Ethereum and Google
Just like Google has become the goto place for searches on the internet, it now also seems that Ethereum is the winner of the booming world of decentralized finance (DeFi). Although it looked at the end of August like DeFi would fizzle out following the Sushi story, it remains an important part of the cryptosphere.
Vitalik Buterin, CEO of Ethereum, has long been seen as a critic of DeFi. For example he stated over the summer that:
DeFi is still fine, but don’t act like it’s a place where you should advocate for a lot of regular people to put their life savings into.
However, as all projects surpass record after record and see their total value in the DeFi ecosystem grow (is has by now reached $13 billion), all of them seem dependent on Ethereum.
Ethereum Surges Amid ETH2 Launch And Defi Rally pic.twitter.com/EFXolL1Ufy
— CryptoCurrencyNewsInvestment (@CryptoC96708424) November 7, 2020
According to certain market metrics, Ethereum now holds some 96% of the total transaction volume in DeFi projects.
Therefore, just as from time to time we must ask ourselves whether it is good that a certain market segment is dominated by a single player, the question in the cryptosphere must be asked: will DeFi in the future be controlled by a single network? And more importantly, what will Vitalik’s reaction be if a serious contender rises up?