DeFi 800% Users Growth Reached All-Time High, Raging Against the TradFi Machine, Inflation is the New Normal
1. DeFi Users Reached All-Time Highs growing 800%
Decentralized Finance of DeFi has become the hottest topic in the finance world. Data from Dune Analytics has shown that Ethereum DeFi Users Reached New Highs Over 4M this week, Growing Roughly 8x in a Year.
In Plain English, DeFi is a term for peer-to-peer financial services on public blockchains, primarily Ethereum. Instead of requiring a regular bank, to earn interest, borrow, lend or buy insurance, DeFi does not require paperwork or a third party because everything is replaced by a Smart Contract.
So here’s an overview of what TradFi is. Retail banks, commercial and investment banks, and also Fintechs. The JP Morgans, Paypals, Visas, Bank of Americas are all characteristics of TradFi. Basically heavily regulated institutions to ensure stability … or not… (Subprime 2008?) ….(Goldman Sachs’ 1MDB Scandal?)
In other words, TradFi has been sort of enjoying this sort of default operating mode for far too long while extracting too many fees as middlemen of the system.
So why are we seeing users flocking to DeFi? How will a Post TradFi world look like? What happens when the so-called Middleman is removed? In a perfect world, users won’t have to pay fees to big institutions. But in a DeFi world, we still have to pay gas fees.
Singular’s Take: Ethereum is like the main currency when it comes to DeFi but it is still expensive to transact. The good news is new Layer 2 protocols will be able to slash Gas Fees significantly in the near future.
Singular’s Action: The recent Crypto and DeFi shakeout present some good long-term plays. Top 3 Defi Projects on our watchlist, Long on Dips with 2-3 years time horizon Aave, Pancake Swap & Fantom.
2. Inflation Is Becoming the New Normal
Last week Fed announced that there are similarities between perceived excesses in financial markets today and the conditions that proved most dangerous for the economy during the 2008 financial crisis. From the peak of tech stocks, we’re now experiencing a pullback in Big Techs. A 20%, 30%, or 40% drop in some Blue Chip Tech stocks a.k.a “Pandemic Rockstars” the market failed to convince the Fed to move the policy lever.
The result? We’re seeing inflation with bigger bills at the grocery store and gas pumps. In plain English, the overall markets is transitioning to pandemic driven to a new normal: High Inflation and Rising Interest Rates.
While it is still unclear Fed’s plans to begin raising interest rates “soon” – possibly in March could tame inflation but whenever we hear “Transitory”, we want to be prepared for more volatility in the markets.
Singular’s Take: Whether or not you have a net worth of $10k or $1M, we believe inflation is becoming a new normal and the key is to position our holdings. Remember, everytime we hear inflation is “transitory”, there will be good buying opportunities.
3.) How NFTs can Transform Health Information
Last year, we saw Non-Fungible Tokens or NFTs exploded with its utility equivalent of a certificate of authenticity. Now imagine NFTs disrupting the Healthcare industry. The current healthcare industry's huge lack of data transparency could open doors for corruption, fraud, and administration errors. So how can blockchain technologies fix that? Well, it’s already happening, blood organizations are using NFTs for blood donations.
Enter NFTs for Healthcare. This week, Harvard Medical School and the Technical University of Munich published a report that outlines how NFT can potentially transform health data giving consumers more control over ownership and control.
With a $4.1 Trillion Market Size and 20% of GDP spent on healthcare in the US alone, Singular believes NFTs and blockchain technologies can potentially disrupt the current healthcare data industry wherein most part are inefficient, centralized, and still uses outdated data management systems.