Those chasing high yields through DeFi tokens in pursuit of ETH will be disappointed in this round of the bull market.
The summer of DeFi taught us that the accumulation of value flows from ETH to DeFi projects. This is a logical conclusion, after all, DeFi is the most popular area in the Ethereum ecosystem.
However, what is now obvious is that the real high yields of ETH actually come from 'established coins' (such as XRP, HBAR, XLM, ADA, TRX, ALGO, etc.). These belong to the B-class mainstream coins, with market capitalizations in the tens of billions, but lack the fundamentals to support their value. Their main drivers are the Lindy effect (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 to these large-cap 'established coins', such as XRP, ADA, HBAR, XLM, ALGO, etc. These tokens have market capitalizations reaching tens of billions of dollars 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 still do not matter. In a retail-driven bull market, revenue and usage metrics have minimal impact on token performance.
2) Unless you have an asymmetric advantage in the small and mid-cap token space, holding leveraged ETH or larger mainstream coins is wiser than expecting mid-cap DeFi tokens to outperform.
Since the summer of DeFi, the token market landscape has significantly expanded. With the increase in optional tokens, the risk of choice also rises, making it more difficult to pick the right DeFi tokens and statistically yielding lower returns.
In a bull market, fundamentals are not your friend. Don't be clever: keep it simple and concentrate resources on the obvious choices.
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