Crypto – Defi or Cefi?

Defi – Fast and Furious?

I started to dabble in Defi sometime in Mar 2021, staking in CAKE and BUNNY, and also stablecoin vaults. The high “dynamic” yields of CAKE (~2xx%) and stablecoins (40-70%) was what attracted me to such Defi platforms. Looking back, I would say that Defi is kind of like “short term” trading, where one go in and come out fast, without committing long term love to the platform. Yes, there should be no “love”.

One week of APR/APY in Defi is akin to one year of interest rate in traditional investing terms. Where there is high yield, there would be high risk. You can see the “yield” changing from 2xx% to 1xx% (or even 0%) in a matter of weeks for fictional coins, and not to mention the risk of being rug-pulled by anonymous teams. You also run the risk of the underlying coins declining in value, which essentially means loss of some of the initial capital. If u LP, u will get IL. LL lor unless you are doing non-algorithmic stablecoin-stablecoin LP.

There are still many new Defi projects springing up. Cat, dog, whale, monopoly and other creative names in the Defi field. Nobody knows who will be the last one standing. The initial publicity tweets say “2XXX% APR”, but what is missing is that the APR will go down. “Should I go in?” – I sometimes wonder to myself. The extremely short-lived high yield does not justify the “returns” I may be getting. Not to mention the “scam“dalous messages from whatever Telegram or Discord group, or the inaccurate “APR/APY” from the platform. It is always dangerous to talk to someone named “admin“. He or she could be someone trying to “swipe” the keys to your wallet.

Maybe, I should just hodl the bluechips – BTC and ETH, or do Cefi?

Cefi – Slow and Steady?

BlockFi, NEXO, Celsius, Hodlnaut – theses are popular “Cefi” platforms to deposit your crypto to earn interest. Kind of Fixed Deposit (“FD”) concept except the capital you provided is not guaranteed by any government body. Over time, the Cefi interest rate seems to be waning month by month, just like how the FD rates are lowered yearly in recent years. It’s like when people said decades ago, the FD rates was 10%, but now its near zero. I am not sure if this is true as I was still too young to know the rates then.

And I dunno if by the end of the year, would there still be any meaningful interest rate left for us to deposit and earn. Well, if there’s no “fish”, “prawn” is still better than nothing. At least, you don’t need to be shocked by any migration issues or “TITAN”ic losses. Sometimes, its may be better to see “moolah” coming in weekly rather than nothing at all. After all, when you look at traditional financial investing, a 8-10% return from stablecoins is better than 5% dividend from REITs.

Choose The Animal Within

In the end, its just to oneself to choose if you wanna be the turtle or rabbit. The rabbit is able to hop and hop, zoom away fast and furious. The turtle crawls and do it slow and steady. But don’t forget the rabbit cannot swim. The turtle is able to swim in the big sea at ease. Speed is therefore relative depending on the landscape you are in.

Everyone can reach the end point, but it’s a matter of when, where and how.

Have a safe journey ahead in the Wild Wild West!