The founder and CEO of Binance says he’s giving crypto traders an unfiltered dose of truth on the state of the crypto markets.
In a series of tweets, Changpeng Zhao warns investors about the booming DeFi market.
“(Un)popular opinion: I see lots of bubbles in DeFi now. I believe the core concept of ‘staking coins to provide liquidity and earning a return’ will stay.
But these super high yield returns subsidized by new tokens won’t. Super high risk. Be cautious!”
Zhao expanded on his DeFi views in a recent interview with Boxmining, saying that the majority of projects in the DeFi space will fail in the long run.
“Initially, when people talk about DeFi they think about lending so you can lend your coins… but now, you lend the coins to provide liquidity. When the liquidity is good, people trade more and trade more easily. I think automatic market makers are an interesting invention. They’re a really simple concept…
At the same time,… most projects in the DeFi space will fail. It does not mean that DeFi is not good, it’s just that only a few will succeed. The few that succeed will succeed wildly, but when you’re investing in the DeFi space, do be very careful. It’s a new field. (A) majority of projects do fail in any new field.”
In another “unpopular” tweet, Zhao says Bitcoin and Ethereum won’t be the only long-term survivors in the crypto market.
He points to the speed of the top two crypto assets by market cap as a bottleneck that other blockchains will surpass.
“Unpopular opinion: ‘One blockchain to rule them all’ is unlikely, due to capacity limits. We need more and faster blockchains.
I consider BTC and ETH as huge successes, as their usage already far surpass their designed capacity. But we need more.”
Binance recently launched Binance Smart Chain (BSC), which is designed to allow developers to create smart contracts for tokens on the network that powers Binance Coin (BNB).
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