If you have some knowledge of the cryptocurrency industry, then you have likely heard of decentralized finance (DeFi).
It’s not a new concept in cryptocurrency – it has been around since 2017. However, it has recently surged in popularity in 2020.
This surge in popularity has led many to ponder if DeFi is the next ICO bubble. And if DeFi is the next ICO bubble, will it pop just like the ICO bubble did at the end of 2017?
We’ll answer those questions, and more, in this article.
Is DeFi the next ICO bubble?
To answer the primary question, DeFi has all the makings of a cryptocurrency bubble. It’s talked about a lot and the price has increased dramatically.
There is, however, one major difference between DeFi and the bubble that surrounded ICOs:
DeFi is currently in use by real people.
This contrasts with the ICO bubble because that bubble was almost entirely based around speculation. That speculation related to what the projects could accomplish and not what they have accomplished.
In simpler terms, the ICO bubble was akin to the dot-com bubble. All these companies had amazing ideas that they were selling people, and then fell flat on the execution.
For that reason alone, DeFi is certainly not positioning itself as a bubble similar to the ICO bubble. It actually appears that DeFi is simply a result of many of the ICO projects coming to fruition.
Remember, the ICO projects of 2016 and 2017 had long timelines. Contrary to the understanding of many investors, most of the crypto projects that had an ICO did not plan on disrupting the entire industry within a year.
With that said, DeFi will not follow a perfectly straight line to a higher price. There will be ups and downs, bear markets and bull markets, and highs and lows.
This next section will focus on the future of DeFi.