Waves founder and chief executive Sasha Ivanov has issued a warning over a potential “ICO bubble” occurring in the decentralized finance (DeFi) investment space.
According to a series of tweets made June 23, Ivanov likened the surge in interest for DeFi projects to the sudden influx of capital for initial coin offering (ICO) projects in 2017, with the latter eventually suffering a devastating bubble.
Please let's not make a new ICO bubble out of #DeFI
— Sasha Ivanov (@sasha35625) June 23, 2020
Ivanov explained the current state of DeFi is mostly being modeled after existing financial systems, which in turn will lead to predictable cycles such as bubbles, hacks, and defaults.
What's funny about the current #DeFi state – it's mostly trying to replicate what we've already got (CeFi), but for #crypto.
So you're gonna have all the usual fun – bubbles, defaults, bank runs, scams, hacks, court cases… you name it.
— Sasha Ivanov (@sasha35625) June 23, 2020
The Waves CEO explained his tweets in a statement to CoinTelegraph, saying he strongly believes in DeFi but is concerned about the growing hype.
He said,
DeFi is the future, but it's going to be coming through a bubble part of the cycle now, which can harm its long-term development.
Ivanov continued, calling DeFi products more “sophisticated in nature than simple ICO tokens” but still at risk for future market volatility and price crashes.
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