Crypto analyst Miles Deutscher expects the 2024 decentralized finance Ponzi narratives received’t reoccur regardless of the rise of the restaking business. He provides, nonetheless, that the EigenLayer airdrop, which is the biggest drop In 2024, might trigger the yield-hunting frenzy of earlier DeFi Ponzi schemes.
Except for the restaking narrative, Deutscher is betting on synthetic intelligence, BRC-20, real-world asset tokenization, gaming NFTs, and decentralized infrastructure tasks as essentially the most profitable narratives to look at.
EigenLayer Pulls $2B in Restaking Quantity
Deutscher mentioned tasks like EigenLayer encourage crypto staking on a number of blockchains, making staking cash extra capital-efficient. The person can safe a number of blockchains directly and obtain rewards from all. For instance, staked Ethereum on liquidity platforms like Lido may be restaked on restaking apps on EigenLayer, permitting what Deutscher calls yield-stacking.
Learn extra: What Is Liquid Staking in Crypto?
Nevertheless, tasks like EigenLayer, based mostly on the reason of tokenomics, appear to be Ponzi schemes at face worth, Deutscher mentioned. Their sustainability can be up for debate.
“I see restaking as the subsequent model of the DeFi Ponzis…The re-staking narrative for my part may be very harking back to the 2021 DeFi Ponzi protocols. When folks tackle extra danger, they looking for yield, they’re hungry for alternative on chain, and that’s what actually noticed the DeFi Ponzi Mania of 2021[and] 2022.”
Learn extra: Yield Farming vs. Staking: Which One Is Higher?
EigenLayer TVL | Supply: DeFi Llama
Critics have identified that DeFi buyers chase yields earlier than getting paid. Nonetheless, restaking platforms have already accrued $2 billion since their launch.
Well-liked apps embody KelpDAO, ether.fi, and Renzo on EigenLayer. On their very own, these three tasks have thus far attracted $800 million.
DeFi Crypto Crime Triggered Ponzi Label
Forbes likened DeFi staking to a Ponzi scheme in 2022. Forbes noticed that the undertaking is barely sustainable when extra buyers drive up the worth of the staking token.
“As a result of nearly all of individuals are additionally staking, the staking rewards quantity to token inflation, which drives the worth down. [Therefore] the ecosystem should expertise a big improve in new buyers to offset the growing provide. As a result of it depends on new buyers to take care of its worth, it’s much like different Ponzi schemes.”
Final 12 months, the US Commodity Futures Buying and selling Fee slammed Opyn, ZeroEx, and Deridex for unlawful transactions. On the time, the company criticized utilizing superior know-how to hide crypto crime. The company has known as for stricter guidelines round DeFi.
“Someplace alongside the best way, DeFi operators acquired the concept that illegal transactions turn into lawful when facilitated by sensible contracts.”
The US Justice Division charged the founders of DeFi undertaking Forsage for a $340 million Ponzi scheme in 2023. Pal.tech, the Web3 social media platform, has additionally attracted criticisms for its resemblance to a pyramid scheme.
BeInCrypto has contacted Miles Deutscher for remark however has but to listen to again.
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