Want To Play a Game?

First, lets provide context to what I am talking about: Uniswap. This dApp is a decentralized exchange where users can trade defi projects based on the ETH network functioning as ERC20. Essentially you can specify your order for a specific ambiguous alt coin project, and it will fill providing someone can meet your needs.

DEX > CEX?

This sector of decentralized finance and yield farming has been "mooning". Its gotten to the point where there is some data we simply cannot ignore:

First, is the fact that more fees are being paid on Uniswap than all other cryptocurrencies, other than the mother chain Ethereum. This is insane. and shows the inflated market interest within these Defi projects.

More data shows that this platform even has more trading volume that Coinbase! Considering that CB is one of the world leaders in the space of cryptocurrency, it is crazy to conceptualize that one decentralized application is creating more volume than them.

What is the reason WHY?

A massive proportion of this volume is coming from people capitalizing from this DEFI/Yield farming craze. If you want a more in-depth explanation as to what is happening, check out our last blog post here. To me, it seems that there has to be a bubble forming here. There is such high greed which is manifesting through aggressive cross leverage/collateralized capital that the entire space is interconnected. 

Should we jump in?

Probably not? This niche is very tech orientated and requires elaborate understanding of how ERC20 wallets function, what projects are "reputable" (if you can call them that lmao), and how to properly execute the swaps. Its challenging, but not impossible. Here is a quick diagram on how to use Uniswap:

It is important to note that this type of investing/trading carries extremely high risk. I would consider this risk to be higher than just cryptocurrency on its own. This niche is a bubble, and it will not last forever.

Use what you can afford to lose, and recognize the mechanisms of risk at hand. You cannot set stop losses. Some coins are going to 0, and others are going to 1000%. Don't lose sight of the goal: protect your capital.