[Tarophin] Defi platform, precarious Garosu-gil
[Tarophin] Old and deserted districts in the outskirts of Seoul are considered lands of opportunity for those filled with ideas but not much in their pockets. As these entrepreneurs start building their own businesses, it brings life and character to the area. The area is recognized through word of mouth, foot traffic increases and the resulting businesses boom. Then rent starts to increase as the area becomes more successful. With skyrocketing rents, the only businesses left are cosmetics and fashion businesses, which achieve 50-plus-percent margins, or large franchises that have ample capital to cover the deficit through marketing. This is gentrification, a phenomenon which swept the streets of Hongdae and Garosu-gil. #For Ethereum, interest business may be a pie in the sky The craze over DeFi, or decentralized finance, contributed to the popularity of liquidity pools, a term referring to a point where price of an assets fluctuates greatly, oftentimes offering opportunity for short-term profit. Starting with COMP and YFI, other liquidity pools such as sushi, kimchi and tiger came out. Some gave massive returns back to both the user and product developers. With hopes of the next jackpot, an increasing number of people started flocking to the Ethereum market, and the platform’s value rose day by day. However, there was one dilemma. Ethereum uses a single ETH coin to pay platform value and transaction fees. If Ethereum's platform value is recognized and the price of ETH goes up, the fee increases. When a user leaves due to the burden of fees, the value falls and the price of ETH goes down. For some time this was okay, since investors were blinded by the massive returns they witnessed and were willing to pay double and even triple the transactions fees. At one point, Ethereum’s transactions fees reached $80. Compared to large-scale “whale” investors, it became too big of a burden for individual "ant" investors to take. The Ethereum market was becoming gentrified. #Investors look for new opportunities Investors pushed out from the Ethereum market were on a search for unchartered opportunities. Their first discovery was Interchain. It was easy for Defi investors as Interchain is used to connect different blockchain platforms. Other Defi platforms such as Polkadot and Cosmos followed. Some platforms started exempting transactions fees, namely Tron. It made Just, a carbon copy version of Maker DAO, and Just swap, a copy of Uniswap, and cobbled together a DeFi system. Using the energy and bandwidth provided to all of the Tron accounts, ant investors can make transactions without paying fees. Now they could finally harvest interest. #Gentrification or Paradise? Due to Cryptokittie's surge in transactions, improving the number of transactions per second (TPS) was top priority for such platforms. Everyone lauded how high their TPSs is, but most of them were found to have lied about. Another top priority for such platforms was servicing DeFi. However, some did not have DApps, and others were just helpless. Platforms that were even able to service them argued they were the first creators of the DeFi concept. Due to Ethereum's soaring fees, other platforms found opportunities to seek a revival through DeFi. They may be short lived as a result of gentrification or become a paradise and live on as a major pillar in the DeFi ecosystem. We would have to wait and see which platform will reap success from the overflowing liquidity, expand their DeFi ecosystem and bring in users.