Itâ€™s been a bloodbath in the DeFi market over recent days. The best case in point of this trend is Yearn.finance (YFI) â€” largely regarded as the â€œindexâ€ for Ethereumâ€™s decentralized finance space.
The coin is down 35 percent in the past week alone and nearly 50 percent from the highs established just weeks ago.
Other top coins in the DeFi space have also seen strong corrections, with some dropping even further than YFI from their recent highs. Ryan Selkis of MessariÂ summedÂ it up well just recently when the shared the tweet below, highlighting the level of carnage seen in the DeFi space:
This strong correction has left many fearful as to what comes next for this hot segment of the cryptocurrency market.
Most remain optimistic about DeFiâ€™s long-term prospects. But itâ€™s worth noting that those that say this have asserted that they do not know where exactly the ongoing bear trend will put in a bottom, then reverse higher.
Ethereum DeFiâ€™s fundamentals are stronger than ever
DTC Capital founder Spencer NoonÂ thinksÂ that while the crypto market is blood-red today, he believes that the fundamentals of the decentralized finance space remain better than ever:
â€œCrypto markets are red today. But consensus among most instl investors is that this is macro driven; not crypto driven. The fundamentals for $BTC $ETH and $DEFI have actually never looked better.
Some will BTFD. Others will scale in. I expect both will be rewarded handsomely.â€
Noon added that this logic applies to Bitcoin and Ethereum, both of which have been some of the best-performing macro assets of the COVID-19 pandemic.
One reason why Noon thinks that DeFi is in such a good place on a macro time frame is the relatively high-interest rates offered in this ecosystem compared to traditional finance â€” now dubbed TradFi on Twitter.
The cryptocurrency investor and commentator made this view known on Sep. 21 when he shared an advertisement from a fintech company announcing a â€œgroundbreakingâ€ savings product that nets users three percent per annum compared to most national banks that offer 0.01 percent to 0.9 percent per annum on cash deposits.
DeFi, on the other hand, has products widely deemed â€œsafeâ€ by security auditors that can yield in excess of 20 percent per annum. And more risky products, often related to food coins, can yield returns in the hundreds of percent per annum.