Despite all the excitement about DeFi, Ethereum creator Vitalik Buterin is not involved in yield farming. He recommends investing small amounts until really understanding how the system works.
The launch of YAM recently filled the crypto community with excitement. This decentralized finance (DeFi) protocol promised its users the ability to perform “staking” with equal opportunities. However, few rode the wave of decentralized finance. Vitalik Buterin, Ethereum Founder, himself commented that he has not been actively involved in yield farming.
It seems that 2020 will go down in history as the year in which decentralized finance entered the crypto market with force, after years of building the basic infrastructure that sustains the crypto world. Organizations like Tron and Binance are beginning to focus their efforts on DeFi, as a mechanism to face traditional finance designed around fiat money.
This boost to decentralized finance includes yield farming, which is assuming unprecedented importance. This is a method to drive decentralized lending platforms. Users who participate in it invest a certain amount of money, which the system will use to grant loans in a decentralized way. In exchange, investors will receive rewards in the DeFi platform token, in addition to interest on the loan.
If the price of the platform’s token increases, investors will receive significant returns on their capital. However, if the platform fails, then they could lose all their capital.
Despite these risks, the crypto community has been turning to investment in these types of yield farming projects. This has led to the rise in the price of currencies like YFI, which has increased in value several times in recent days.
Vitalik Buterin Does Not Ride DeFi Wave
Not everyone is sharing the excitement that yield farming has generated. Several figures in the crypto world have warned against getting too excited about these types of projects. They have reminded the negative effects that the rise of Initial Coin Offerings (ICO) had in 2017. Vitalik Buterin is one of those who have not yet ridden the DeFi wave, admitting on his Twitter account that he has not participated in yield farming.
“The truth is that I have not participated in yield farming. I put some coins on uniswap some time ago, but I withdrew them after earning a few percentage points in commissions, but that was it,” stated Vitalik.
The founder of Ethereum added in another tweet a warning for the users of the platform against this type of project. In it, Vitalik tells users about the risks of participating in “the latest hot DeFi thing” if they do not understand what is happening. He recommends exploring the various Ethereum dApps and starting by investing very small amounts.
In this way, Vitalik Buterin would be warning against an excess of excitement about these DeFi projects. Although these promise quick profits in a short time, they are sometimes a source of losses for those who invest in them.
By Willmen Blanco
