#CryptoVaultDepositsTop$10Billion đš $10 BILLION IN CRYPTO VAULTS. BULLISH LIQUIDITY OR A DEFI RISK TRAP?
Crypto lending vaults have grown to about $10 billion in deposits which's much higher than $1.5 billion two years ago. This shows that there is a lot of growth happening in on-chain finance. Having more money does not mean all tokens will go up in value.
đ The positive view: More money going into DeFi can help with lending and create demand for crypto assets that are used as collateral.
â ïž The danger: Vaults rely on the quality of the collateral how liquid the assets are, how secure the smart contracts are and the choices made by curators. If the market becomes very unstable people might want to take their money out and forced liquidations could make selling especially for less-liquid altcoins.
đ What is important now? Look at where the vault capital's being used whether the returns are still possible to keep up and how easy it is for people to get their money back. Just because more money is coming in does not mean that ETH, SOL or DeFi governance tokens will go up.
S&P Global has created a Vault Risk Assessment framework that looks at six areas of risk. These assessments are meant to check for risks not to promise safety or returns.
Do you think the $10B in DeFi vaults shows that more institutions are confident or could it be a reason for the problem, with liquidity?
Personal thoughts, not advice.
#defi #crypto #Ethereum #altcoins
$ETH $AAVE $MORPHO
Crypto lending vaults have grown to about $10 billion in deposits which's much higher than $1.5 billion two years ago. This shows that there is a lot of growth happening in on-chain finance. Having more money does not mean all tokens will go up in value.
đ The positive view: More money going into DeFi can help with lending and create demand for crypto assets that are used as collateral.
â ïž The danger: Vaults rely on the quality of the collateral how liquid the assets are, how secure the smart contracts are and the choices made by curators. If the market becomes very unstable people might want to take their money out and forced liquidations could make selling especially for less-liquid altcoins.
đ What is important now? Look at where the vault capital's being used whether the returns are still possible to keep up and how easy it is for people to get their money back. Just because more money is coming in does not mean that ETH, SOL or DeFi governance tokens will go up.
S&P Global has created a Vault Risk Assessment framework that looks at six areas of risk. These assessments are meant to check for risks not to promise safety or returns.
Do you think the $10B in DeFi vaults shows that more institutions are confident or could it be a reason for the problem, with liquidity?
Personal thoughts, not advice.
#defi #crypto #Ethereum #altcoins
$ETH $AAVE $MORPHO