Dive Into DeFi: Don’t Be A Maximalist

It is essential to take a broad look at the market and listen to what people are saying. I am seeing diehard supporters of both ETH and BSC DeFi ecosystems. GREAT!

By
Ben Antes
on
February 21, 2021
Category:
Dive Into DeFi

Introduction

For years I watched Bitcoin maximalists take the position that holding any other crypto other than Bitcoin is a pointless waste of time. I have always disagreed, and that stance is paying off well. I am starting to see now that my Twitter feed is a battle between DeFi maximalists, particularly between Ethereum and BSC De-Fi supporters. I think both stances are incorrect to take. 

The idea that there can be only one chain to succeed in Defi goes against what I believe to be common sense market economics for starters. In a free market (this is our goal in crypto), a single monopoly is incredibly unlikely to occur. You may see a monopoly show up in highly regulated marketplaces like a public utility, but even then, better options eventually present themselves. Cable TV markets have been incredibly monopolized due to the high entry barrier, but that is now changing thanks to changing infrastructure and streaming services. Free markets and monopolies simply do not go well together. 

As a test of this thesis, think of any market you can that is moderately free: tech, retail, grocery, etc. In no example that I can think of, does one entity force all other competition out of business. Instead, we tend to see large players emerge, with smaller ones continually nipping at their heels. Free market competition drives innovation in terms of products and strategy. Eventually, we see a new competitor emerge, causing real disruption in an industry. 

A second point driving my belief that a single chain will not rule DeFi is that human nature simply will not allow it. People like choices and have preferences. There was a study conducted on this very point decades ago, and an author by the name of Malcolm Gladwell analyzed the significance of what it means. It sounds silly, as it is about pasta sauce, but the findings changed marketing based on consumer science. Find his Ted Talk Here: Malcolm Gladwell: Choice, Happiness and Spaghetti Sauce

Now that you have watched this Ted Talk, you will find out:

There is no perfect blockchain; there are only different kinds of blockchains that suit different investors.

Each investor will have a unique set of expectations for the blockchain they are utilizing. For some, decentralization is all that matters. For others, cost. For most, the answer is somewhere in the middle, and each user will make a personal decision about where they want to take their money. 

As an investor who deeply wants crypto to succeed, I want to see a variety of choices that meet every investor’s individual preference. While ETH demagogues scoff at the centralization of BSC, they forget that ETH fees quite literally block out a segment of investors. Is this really the crypto dream? Gatekeep crypto from the smallest investors in the name of what I understand to be a toxic cult belief system? 

Now BSC maximalists are not free and clear either. Decentralization matters. I want to see a BSC with more node operators. However, I do not want that at the cost of access. The cheap cost of BSC transactions is a fantastic feature that allows even the smallest investors to participate, but we need to be secure. Where is the balance? I am not sure. 

From an Investor’s standpoint, I am building my positions based on this theory. 

Of course, this is only a theory, but it means that I should be building my portfolio with blockchain diversification in mind. I am incredibly bullish BSC. Obviously, I am also incredibly bullish on ETH DeFi. I also like the propositions of Thorchain DeFi, and maybe we eventually see a Bitcoin DeFi ecosystem. I want a piece of all of it. 


BSC has been hot. I am taking this time to rebalance into my ETH and BTC positions. I am using BSC to do this, but I am purposefully building liquidity positions with zero BNB exposure (Before you tell me that these are not “actually” ETH or BTC, I am aware, and I do not care. WBTC is not real Bitcoin, and USDT is not real dollars. We operate in a financial world full of derivatives; get over it). These are in the form of BTCB/BUSD, ETH/BUSD, and BTCB/ETH. On BSC, you can even position in UNI and YFI. I have not gotten involved in DOT yet, but I am also building healthy Rune LP positions. 

Summary

It is essential to take a broad look at the market and listen to what people are saying. I am seeing diehard supporters of both ETH and BSC DeFi ecosystems. GREAT! I will invest in both as that diehard support is simply evidence to me that both will perform incredibly well. While I do enjoy taking pop shots at ETH (and arguing with Greg that BSC will flip ETH DeFi to the high heavens), the reality is that the people I’m conversing with on Twitter (or Greg) are simply a confirmation that ETH has a community that will continue to develop and grow. The same is true about BSC. 

In short, don’t be a maximalist. 




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Ben Antes

KCrypto is BSC News' Financial manager and one of the four founding team members. KCrypto self-proclaims himself as a yield farming "guru" who finds himself researching the latest De-Fi projects.