DeFi And Crypto Are Starting To Take Over
There is an amazing amount of progress being made. We are nearing the Rubicon for crypto whereby there is no turning back. While almost all in the industry agree there is no stopping things, we are still a fair ways from mass adoption.
That does not mean, however, that the metrics are not validating what we said for the last couple years.
Decentralized Finance will be the ultimate successor to our present financial system. The numbers are still heavily skewed in favor of the Wall Street world. Nevertheless, the drop in the bucket that is DeFi is growing at a massive rate.
According to Defipulse, the activity is growing.
As we can see, there is over $43 billion locked up in the major DeFi applications. This is up from $275 million in early 2019 and $1 billion a year later.
The key will be to see how things unfold over the next couple years. We could easily see another 10x of this total throughout the rest of 2021 was more money enters the industry along with appreciating prices.
Speaking of pricing, we all know that Bitcoin and Ethereum are at all time highs. This has led to an explosion in the total market cap in dollar terms. This, too, is at an new high, far eclipsing what was achieved before.
As we can see from Coingecko.com, the market cap of the crypto they list is nearing $1.8 trillion. The previous high during the last bull market was about $800 billion.
We also can see that Bitcoin makes up 60% while Ethereum near 13%. This means those two coin account for near 3/4 of the total crypt value.
This has led to a strong move in the entire industry. However, this is not where the paradigm shift for society is going to come from. If we look at this from a distribution/resiliency standpoint, we see this is too top heavy. There is far too much concentration in these two coins as compared to the rest.
It is not something that is surprising or unnatural. In fact, it is to be expected. Over time, things tend to fan out further. So the concentration will natural migrate elsewhere as other projects gain attention. We are not as that point yet as shown by the lack of network effect in many areas.
Ben Geortzel is one of the leading AI minds in the world. For the past 30 years, he immersed himself in the field of advance human technology in an effort to achieve superintelligence.
Somewhere along the way, he realized that humanity's future is not serviced is the advanced technology we were creating was in the hands of a few countries and a handful of corporations. This was not a distribution model that would help to serve the global population.
For this reason, he started SingularityNet, a blockchain based, decentralized platform for Artificial Intelligence. It had one of the more successful ICOs during that craze selling out in under a minute.
His feeling is that we all must participating in taking on Big Tech. The power structure that is forming is not going to be helpful to anyone. Thus, SingularityNet along with hundreds of other projects can shift the power through the decentralized and distributed process.
One area that Goertzel sees an issue is with the liquidity of many projects. While Bitcoin and Ethereum get a lot of attention, many alt-coins are tied to valid projects yet simply lack the liquidity to see much happening with their token. This tends to lead the market to overlook them, stifling innovation and growth.
Goertzel has an answer for this too. He is spinning off a DAO from SingularityNet called SingularityDAO. Not surprisingly, he believes that adding AI to DeFi, especially among the lower liquidity tokens will yield huge benefits for the entire industry.
The SingularityDAO project, spinning off from the SingularityNET AI/blockchain platform I lead, aims to use DeFi tools together with neural-symbolic AI to foster liquidity, increase value and decrease volatility for lower-liquidity altcoins. SingularityDAO’s AI-DeFi mechanisms make it more beneficial and less risky to hold portfolios of utility tokens that individually have only modest liquidity.
This could really go a long way to assisting many overlooked applications. Their tokens could be more desirable if investors knew they would be able to exit their positions when needed. A lack of liquidity turns a lot of people away from specific projects.
From a numerical perspective, something like this could really grow the total numbers. While Bitcoin and Ethereum saw massive growth, as a percentage it is hard for just a couple tokens to pull everything along. It is far easier when the breadth of the run is much wider. Having hundreds of tokens growing at 10x-100x rates would really enhance the total market cap, at a far greater pace than what the other two could do on their own.
Cryptocurrency and the new paradigm is going to benefit from the two important features. The first is outside money entering the industry. This will help to propel the values higher, pushing greater capabilities to DeFi and crypto based projects.
At the same time, the network effect from users will also add a tremendous amount of value. We see the likes of Facebook and Google achieving trillion dollar market cap as companies. Much of this is from the network effect those companies were able to attain.
There is no reason why hundreds of applications within cryptocurrency cannot do the same thing. While single projects might not achieve the same values, the totality can far exceed what we see the in the present system. This will only provide more liquidity into the market as this captures the attention of even more money players.
Essentially, we are creating a powerful feedback loop that just keeps moving forward and higher.
In raw numbers, DeFi and cryptocurrency is still very small. As a comparison to the existing system, the numbers are miniscule. However, the growth rate is tremendous and this is without much of a network effect from the general public.
once that starts to take place, it is likely we see an explosion that we really have no imagined before. The path to $10 trillion could happen a lot quicker than we think.
None of this is financial advice and the mention of SingularityNet and its spin off project is for informational purposes only.
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