DeFi's Gross Value Locked (GVL) surpassed $80 billion, while the total market value of encrypted currency exceeded $200 billion, setting a new record for both.In 2021, the Gross Value Locked (GVL) of DeFi Ecology in Taifang just exceeded $60 billion.The data illustrate two things: first, DeFi's Gross Value Locked (GVL) is growing at an amazing rate; second, DeFi is rapidly sweeping through the public chains from the original Taifang chain pattern, and the diffusion rate is also amazing.
Is DeFi's Gross Value Locked (GVL) growing at a scale that could create a new currency circle vampire effect?Is it gradually affecting the distribution of funds in the currency circle as a whole?
The reason for this idea is due to the interpretation of two factors.On the positive side is that DeFi's Gross Value Locked (GVL) is relatively real money, with some duplicate statistics, but overall it is "real" based on real money statistics on the chain.On the other hand, the total market value of the $200 billion currency circle is a "false" number, because not all currencies, such as bitcoins, are in circulation. About half of them are actually held by whales for a long time, mostly in cold wallets.At the current ratio of bitcoins to more than 50% of the total market value of the currency circle, that means that a mere total market value of bitcoins may be worth $500 billion.Just imagine, maybe the real capital that really supports this $2 billion market value is only $60 billion to $800 billion?So the total amount of $100 billion in Defi locks relative to the overall market value of the currency circle is no longer a small number, but a considerable proportion.And it is clear that DeFi's Gross Value Locked (GVL) is growing much faster than the total market value of the currency circle.
At present, almost half of the mobile capital is locked in Defi, either for a stable and mainstream currency that earns higher profits or to participate in liquidity mining.Obviously, this is not an exceptional case for many veteran capital allocation strategies. I'm afraid, on the contrary, it is becoming a more popular investment method than stir-fried currency.Newcomers in the currency circle are limited to lack of knowledge and experience. Perhaps real short-term funds are still concentrated on buying and selling currencies, while older and older people do allocate more funds to a wide variety of Defi locks.
Therefore, whether from data analysis or their own experience, it is an indisputable fact that part of the funds from stir-fried coins to Defi locks, and the development to the current scale does form a certain "blood sucking" effect.
How does this vampire effect affect the currency circle?There are also positive and negative effects.On the positive side, the size of the new currency GVL absorbs almost determines its initial price. The reason why so many new currencies have risen tens or even hundreds of times is that GVL is powerful. For example, if a new currency business can dig more than 100 million or 200 million US dollars with the help of its lock-in liquidity, it is almost certain that the price of the listed currency will rise at least tens of times relative to its private offering or IDO price.Then it will gradually fall as the mining population expands (currency increases rapidly).Readers can compare familiar new currencies to see if this is a universal rule.The reverse is, of course, where did the GVLs come from?In addition to the large move of locks in mainstream currencies, some old currencies need to be sold to buy new currency shares.This will naturally cause the old currency funds to lose blood, to a certain extent may cause the decline of the old currency.
So will the following inferences be true?DeFi's Gross Value Locked (GVL) is actually growing rapidly with more and more new currencies coming on the market, as most of the new currency is concentrated in the Defi field or at least partially in the Defi business, and silo liquidity mining is almost necessary.Then the new Defi will draw more and more blood from the old currency. After all, the demand for capital will be terrifying if it grows over $80 billion. The original small disk has become a big one, and it is impossible to leave the total unchanged.New currencies that achieve good GVL levels ($100 million or more) in this case have the potential for short-term currency price spikes, which makes them extremely attractive.And the old currency must replace the new capital with the blood withdrawal fund in full, otherwise how can it maintain the original huge market value?Bitcoins can be backed up by continued infusions from outside US agencies, but what about other mainstream currencies?
Figuratively speaking, the total amount of funds supporting the market value of the currency circle can be seen as a water tank with many water intakes and outlets. There are two particularly noticeable water intakes: one is the investment of U.S. institutions and listed companies, but this water intake funds are mainly concentrated on bitcoins; the other is the capital of new currency circle people attracted by the bull market, which mainly purchases various currencies after entering the water.There are also two particularly noticeable items in the outlet. First, profits are cashed out of cash, some people who make money have already started to withdraw funds from the currency circle; Second, the move of Defi lock-in funds. Although Defi lock-in funds have not left the currency circle, they are actually withdrawn from the old currency and concentrated in the new currency. This move of real funds may form such an effect, the old currency.The market value of the new currency is small, and the growth of the market value after capital injection is small, so the overall market value begins to shrink.
In addition to the funds drawn from Defi locks, of course, the new currency itself is issued, and each new currency will draw a sum of money from the currency circle in the name of a project for "project development".As the size of this blood withdrawal increases, will it be reversed some day in the future, and there will be insufficient funds for institutions and new recruits?Maybe that's the day the bear reversed.New currencies are being issued overwhelmingly. This reversal may not take long. Will it continue until the end of 2021?
Of course, at the time scale of the currency circle, risk does not have much impact on the short-term months.However, the "top" of the coin circle bull market may have added another clock, and the ticking bell reminds us that the big reversal of bear day in the forthcoming counterfeit coins and some of the mainstream currency bull markets will occur.
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