over 2 years ago • 3 mins
I have recently broken into venture capital (VC) and currently work at a spacetech-focused VC fund. I started investing in crypto late last year and intend on playing the long game.
A medium- to long-term investment in the DeFi Pulse Index (ticker: DPI). DeFi Pulse is the S&P 500 of decentralized finance (DeFi).
For the first time, crypto has found a product-market fit in the form of DeFi.
Until the end of April, there was a steady growth in total value locked (TVL) for the Ethereum and Binance Smart Chain (BSC) networks. Growth stagnated in May as crypto prices tumbled. However, even though the TVL dramatically decreased in dollar terms, the value locked in terms of ether (ETH) or binance coin (BNB) has remained relatively constant. This shows an enduring appetite for DeFi.
The DeFi Pulse Index is a digital asset index designed to track tokens’ performance within the DeFi industry. The Index aims to track DeFi projects that have significant usage and show a commitment to ongoing maintenance and development. It’s weighted based on the value of each token’s circulating supply.
Ethereum Investment Proposal 1559 (EIP 1559)
EIP 1559 flips a typical blockchain transaction on its head in order to fix numerous issues with Ethereum’s user experience. Traditionally, a user sends a gas fee to a miner for a transaction to be included in a block. That gas fee will now be sent to the network itself as a sort of “burn” – called a base fee – with only an optional tip paid to miners. The burnt fee is algorithmically set as well, ostensibly making it easier for users to pay a fair fee.
The proposed shift to proof of stake operation should expand the Ethereum network’s throughput from 15 transactions per sec to 4,000 in 2021 (via so-called rollups) and 100,000 by 2024 (via sharding).
DeFi promises to make money and all services around money accessible to every single person with a smartphone and an internet connection. In 2020, total value locked in DeFi applications grew from about $700 million to nearly $15 billion. I believe Ethereum’s Market cap is set to exceed $1 trillion in the next 2-3 years – up from its current $250 billion – and this will allow DeFi projects to grow by 20-50x.
Does the DeFi Pulse Index get your pulse racing? Let us know your thoughts on Allan’s pitch here.
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