Author: Sam
Compiled by: Shenchao TechFlow
Those who attempt to chase high yields through DeFi tokens will be disappointed in this bull market.
The summer of DeFi taught us that value accumulation flows from ETH to DeFi projects. This is a logical conclusion, after all, DeFi is the most popular area in the Ethereum ecosystem.
However, it is now evident that the real high yields from ETH actually come from 'established coins' (like XRP, HBAR, XLM, ADA, TRX, ALGO, etc.). These belong to B-level mainstream coins, with market capitalizations in the billions, but lack the fundamentals to support their value. Their main driving force is the Lindy effect (i.e., the value of longevity) and the exposure from centralized exchanges (CEX), which makes these tokens a simple choice for non-crypto native users.
What we observe is that the high yields of ETH are now flowing into these large market cap 'established coins,' such as XRP, ADA, HBAR, XLM, ALGO, etc. These tokens have reached market capitalizations in the billions, but have almost no network activity to support their value. Their appeal lies in longevity (Lindy effect) and the convenience of being accessible to non-crypto native users through centralized exchanges.
This proves two points:
1) Fundamentals are still not important. In a retail-driven bull market, income and usage metrics have minimal impact on token performance.
2) Unless you have an asymmetric advantage in the small to mid-cap token space, holding leveraged ETH or larger market cap mainstream coins is wiser than expecting better performance from mid-cap DeFi tokens.
Since the summer of DeFi, the landscape of the token market has significantly expanded. With the increase in optional tokens, the risk of selection has also risen, making it more difficult to pick the right DeFi tokens, and statistically lower returns.
In a bull market, fundamentals are not your friend. Don’t be clever: keep it simple and concentrate resources on betting on the obvious choices.
