How To Value DeFi Tokens & Find GEMS!! 💎

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- TIMESTAMPS -
0:00 Intro
2:13 How do you value a protocol?
6:24 Value creation and capture
10:24 Lack of DeFi moats
13:04 Bittrex shoutout
14:00 Competitive advantages
18:57 Future of DeFi?
21:18 Final thoughts

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⛓️ 🔗 Useful Links 🔗 ⛓️

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💰 How Do you Value A DeFi Protocol? 💰

It’s easy right? Just go onto Coinmarketcap and you can see the market cap for the project? Hold your horses, cowboy! It’s not so simple.

Uniswap only very recently issued a token and was Uniswap worth $0 before this? I think not!

Even today, DeFi protocols like DYDX do not have a token. This all makes market cap a highly problematic valuation metric.

Another commonly used metric is True Value Locked. That’s a fancy way of saying the balance sheet of a protocol. However, the value is hardly locked and can flow from one protocol to another in the blink of an eye.

Take SushiSwap for example; earlier this year it forked from Uniswap and took $830 million in TVL with it.

📈 Value Creation and Capture 📈

The key question here is value creation for who? To understand that, we need to know the key stakeholders in a DFi protocol. These are:

► Liquidity suppliers
► Users
► Developers
► Token holders

Tap into my thoughts on how value is created for all these stakeholders in my vid!

🏰 Lack of DeFi Economic Moats 🏰

In short, an economic moat is simply a distinct advantage that a company has over their competitors. This allows a business to protect or increase market share and profitably.

With DeFi, these moats are difficult to build, seeing that value can be withdrawn instantly from a protocol and can quickly flow to another.

Also, most crypto projects are open-sourced which doesn’t lend itself well to traditional moats like economies of scale, patents and regulatory licenses.

💪 Competitive advantages for DeFi protocols 💪

Here are the key DeFi protocol moats I personally have my eye on:

► Integrations
► Strength of community
► Great UI/UX
► Track record for security
► The resources at the project’s disposal
► The team

I expand on all these points in my video. So, be sure to watch it if you want to download my thoughts on this.

🔮 Future of DeFi balance sheet monetization? 🔮

When it comes to value capture in business, everything is quite straight-forward. The company that monetizes their balance sheet the best usually wins.

The issue is that most DeFi protocols haven’t exactly monetized these balance sheets very well just yet. Here’s how that could all change:

► Long term Vs short term liquidity: right now there is no differentiation between the two and that means liquidity providers can hop from one protocol to another. This prevents true value capture. That can all be changed by rewarding long-term liquidity provision and this would lead to real TVL.
► Today, a load of crypto simply sits in smart contracts and does nothing. These are assets on a DeFi protocol‘s balance sheet that could be monetized. One way of doing that would be by using rehypothecation.

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📜 Disclaimer 📜

The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses considerable risk of loss. The speaker does not guarantee any particular outcome.

#defi #crypto #blockchain #ETH #UNI #YFI

[CoinBureau]

All sales go to help supporting the channel and bringing you this top notch content

Also, don't forget to jump into my Telegram and join my mailing list for daily trades and coin tips

[pixelviews]

I keep telling anyone willing to listen, this is the best Crypto educational channel out there, thanks Guy.

[nandagirivenkatakrishnarao]

You are already an "Oracle" for all of us. Keep up the good work 👍

[tomislavrukljac]

FECORE will be the greates of Defi. Its under the radar, had LGE1 and now LGE2, its not even on coingecko and it will have 2 pair with ETH paired. it gone from 50-120$ and its growing every week . Sustain growth and rug proofed 💪

[jeannechase]

Really liked this video. You are one of my favorite Youtubers! Keep up the good work and thanks for being very explanatory. I would suggest you cover security in Defi at a more detailed level for non-techies.

[Paulrobe]

The content you add on here and the delivery is exceptional :)

[Gym_Invest]

Would really like to see an update vid and market analysis on DEFIs 💵

[danielkhong]

Hahaha Burger King is coming for that shirt!

[banzobeans]

This is one serious teaching moment!

🙇‍♂️ I bow to my crypto market guru...

[poseidonslater]

Very good content! Thanks for sharing in such details & structure. Recently was thinking also about rehypo in crypto space & didnt find any information. Perhaps red ties are not involved in these projects yet.. which doesnt mean it's bad. When you start lending something what was borrowed what was put already as collaral  it starts getting confused..

[leaenasolari]

Forget about the Defi hype..$VIDT is true gem that will grow to be one of the big names in the near future. A massive new partnership has been announced today. This is only the beginning of something really big. Jump in now and thank me later for finding this goldmine

[vt]

massiv respect for your great work!

My approach to evaluating defi projects is to look at the fees paid to token holders and look there for the multiples to marketecap.

Because there was still some confusion about this in some projects I unfortunately left some profits in the summer. But for example Kyber as well as Uniswap I evaluate purely after these criteria. In order to make future assessments, I take a look at the percentage share of the individual AMM in the total trading volume also cexes and the price development of Assets trading and try to take growth into account.

[Graceful_G]

This video offers valuable insights on how to evaluate and value DeFi tokens, providing helpful tips and strategies for finding promising projects in the DeFi ecosystem.

It is for investors looking to navigate the complex world of decentralized finance.

[priteshpatel]

Guy can you do a deep dive on graph protocol please 📊📈🙏🏽

[kaimorf]

love the shirt:) and great show as usual. learned a lot.

[redspit]

Very helpful Guy. Thanks for this vid.

[joshcruz]

lol just what I was searching and you release a video today. thanks

[agarf]

Have you ever looked into the game changing Orion Protocol? A defi aggregator of DEX/CEX which allows trading from one’s wallet, pooling liquidity and order books from all exchanges into one trading terminal. Staking ORN gives one a cut of trading fees. Launching mainnet in the next month with private mainnet already online

[SunKing]

Well done mate! You are the "Ash" of crypto (See Evil Dead 2/Army of Darkness)!

[trifidusgaming]

Hey Guy, did you check HEX For value generation by locking up your funds?