The first generation of DeFi emerged in 2020, known as the DeFi Summer, completely changed the way we look at finance by eliminating banking intermediaries and giving absolute autonomy to user
š¹ The core feature of DeFi 1.0 is the Liquidity Mining model
Where projects reward users with their own governance tokens
With sky high APY yields of up to thousands of percent to attract TVL cash flow quickly
šø However, this model has a fatal flaw which is uncontrolled token inflation
Because when the token price drops due to pressure to sell off from Yield Farmer interest hunters
The actual yield also drops, causing cash flow to withdraw rapidly and pushing the project into a death spiral
š¹ Pioneers like layer2 have laid a solid foundation for this industry
But also leaving a painful lesson that a project cannot survive sustainably based on printing money to buy user loyalty
šø The collapse of many DeFi 1.0 projects is proof that without real revenue from Real Yield transaction fees
All flashy financial models are just sandcastles in the face of the big market waves
Do you still hold any tokens from DeFi 1.0 or have you switched to new Real Yield project?
This article is for reference only, this is not investment advice. Please read and consider carefully before making a decision.
