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Is DeFi a Bubble? Experts Weigh In On Hype vs. Value

Ever since the ICO craze of 2017, the cryptosphere hasn’t been able to shake its association with the word “bubble”. At different points in time, nearly every aspect of the industry has been called the ‘b’ word–now, though, analysts have set their sudsy sites on a new corner of crypto: DeFi.

Indeed, DeFi as a whole has been a hot topic over the course of the last year: exchanges, loan platforms, and other projects that act as autonomous hubs that users can use to access a variety of financial services without having to rely on a third party.

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Despite the fact that there has been quite a lot of insular industry hype around the DeFi space–along with whisperings that some DeFi projects may be overvalued–it’s only recently that the ‘bubble’ accusation has been applied so liberally.

Weiss Crypto Ratings didn’t go to far to describe the DeFi hype as a “bubble”, but did say in a tweet that “eventually, the mania will end, and DeFi will trade in line with the rest of the market.”

#DeFi is one of the most exciting things going on in the #crypto right now, but the idea that this sector will decouple from the rest of the market is ludicrous. Eventually, the mania will end, and DeFi will trade in line with the rest of the market. — Weiss Crypto Ratings (@WeissCrypto) June 24, 2020

What has changed? And is DeFi really a bubble?

Surges in DeFIi 2017 token prices could be reminiscent of 2017

The thing that seems to have called the most attention to the DeFi sphere in recent times is the surge in value of governance tokens of certain DeFi platforms–in particular, COMP, the governance token of decentralized loan platform Compound, which jumped nearly 300% in value within a week of its launch.

However, shortly after COMP rose, it fell: after peaking at roughly $372 last month, COMP gradually slipped as low as $165 over the course of several weeks–a...

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