The fear of DeFi as a financial innovation
Fear of DeFi innovation, caution and acceptance.
I ran across this article in Forbes today, following a link from Twitter. I love the premise of the article: Forbes Article on DeFi innovation is always feared, but caution and careful analysis have led investors to pump 80 billion dollars into this financial tool. Perhaps you should also invest in this sector? I also loved the commentary, which I quote below and then discus.
Quote 1
At its core, innovation is exciting. It involves a new way of operating that can bring the promise of greater efficiency and access for consumers and businesses—beyond what we know in the moment. Think of the automobile, the transistor, or the smartphone. However, when innovation comes to finance, it is often met with skepticism over safety and suitability—an issue faced by fintech over the past decade. The good news is that we can all generally agree that fintech has made life easier for most people. Think of PayPal and Rocket Mortgage.
Commentary
This is an important statement. All innovations, defined as new ways of doing things, are met with fear and skepticism. It is human nature to prefer the familiar, even if the familiar is flawed. An old wool blanket full of moth holes is initially preferable then a brand new electric blanket. Besides electricity kills people, right? LOL Fear is a evolutionary trait that keeps us from being eaten by wild animals, and caution a less drastic aversion trait then fear allows us to rationally assess risks and benefits.
Quote 2
Today we hear about skepticism and worry over decentralized finance, or “DeFi.” Regulators have seen the rise of DeFi as increasing the risk in the traditional financial system. Given how skeptical we all were about past innovations that turned out to deliver major benefits, this isn’t terribly surprising. The question is, why does it need to be this way? Can we instead overcome our brains’ status quo bias and recognize that DeFi might reduce risks that exist in the traditional financial system? First, some context. In the roughly 18 months since the emergence of DeFi at scale, approximately $80 billion of capital has been contributed to DeFi protocols—something big. DeFi has grown this fast and become so significant for a reason. Every dollar contributed to a DeFi platform is a dollar someone decided not to deposit at a bank or invest with a traditional asset manager. Why? Because large numbers of people decided that the risk-adjusted benefits of DeFi participation were more favorable than traditional banking or investment services.
Commentary 2
Cautious risk benefit analysis is a core part of all investment strategies. It’s important to sort out your fears and concerns rationally and decide if they are factual or not, plus what measures can be taken to minimize risk and maximize return. The truly remarkable thing about decentralized finance is nit that it’s profitable, and not that it’s risky, it’s that some very wealthy and intelligent investors have invested large sums of money into it, and they have been rewarded.
Fear, like hope springs eternal from the human mind. But if we always surrender to our fears, we never innovate, we never take calculated risks and we don’t learn how to perform risk benefit analysis in the real world.
DeFi is the newest financial investment tool, and it’s complicated like a maze.
But nothing worthwhile is easy, and it really is important that we educate ourselves about the newest tool and harness it for our own good. DeFi is hard, there are many steps and many transfers. An error at any point could cause the loss of a large portion of your capitol. Plus gas fees eat up your capitol even more. Are you looking for an easier route to earn yield-farming profits? There is a solution: @easydefi
Name: EASYDEFI
A DeFi pool on Hive for the DeFi beginner.
This is a new project I am launching here on Hive, which allows you to participate in a high yield, yield farming project created by developers on Hive .
The yield pool is called Cubfinance, and it has 10.6 million plus USD in the pools and farms. You can send Leo or Hive to join the pool use your Hive and earn some of the high yields you hear about in yield farming.
To enroll in this pooled investment:
You send 250 Leo to @easydefi with memo Group A or 250 Leo increments like 500 Leo, 750 Leo, 1000 Leo, 1250 Leo, etc... Thats it.
Current yield farm the pool funds are earning rewards from. Cub-BUSD
What does APR of 158.77% really mean?
If you look at the chart, which the computer code calculates everyday, you see two numbers 30 day ROI of 13.91 percent and 30d 213.24 Cub per 1000$
So for pool members, who invested 250 Leo or more then 100$ USD. You earn one tenth of this estimate or 21.3 Cub per month, about 14$ or a 13.91% return on your investment, each month.
About @shortsegments
Shortsegments is a writer focused on cryptocurrency, the blockchain, non-fungible digital tokens or NFTs, and decentralized finance. He has been a community member for more then three years, and has earned a reputation of 75, on a scale of 0 to 80, which puts him in the top 300 of over 20,000 Hive accounts.
He is also a builder, with two current projects: The first is the No Loss lottery, a prize linked savings account here on Hive, which awards more the 100 Leo in prizes weekly, and which recent surpassed 1000 tickets sold. @nolosslottery
His latest project is Easy DeFi, which creates a community investment pool allowing community members not yet confident enough to invest on their own, a chance to easily invest in yield-farming and staking on Cubfinance. @easydefi
Cubfinance is the Hive communities home grown Yield Farm and is audited by CertiK, a third party which certifies DeFi projects on Ethereum, Binance and polygon ecosystems.
Read more of shortsegments articles here: https://leofinance.io/@shortsegments
Awards, Badges and recognition
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