DeFi on track to become "liquidity blackhole" absorbing all idle assets: Ethereum investor

According to data site Defipulse.com, there is now $951 million worth of value locked in DeFi applications.

Ethereum DeFi on track to become a "Liquidity black hole".

While DeFi has been subject to a number of hacks and vulnerabilities over the years, the faith innovators and investors have in this crypto sub-sector has continued to grow.

"The more time I spent in DeFi space, the more I think DeFi will end up becoming a liquidity blackhole that sucks in all idle assets sitting around doing nothing. There are many ways to farm market neutral yield if you don't want to take on the market risk of holding BTC and ETH.".

The DeFi pioneer explained that the recent growth in his protocol really "Showcases the latent demand for non-ETH assets, and it's the beginning of a broader trend of DeFi acting as an economic vacuum that will eventually attract almost all value to the Ethereum blockchain."

The idea goes that due to Ethereum's systems of smart contracts, which effectively allows anyone to code anything into the blockchain, the network has "Infinite use cases." This market opportunity gives Ethereum the chance to capture upwards of $80 trillion in value, according to Andrew Keys, managing partner of Digital Asset Risk Management Advisors and a former ConsenSys executive.

"Over the past two years there has been a complete transformation in how value is stored and transferred on the Ethereum blockchain,"Watkins commented on the growth in the value of stablecoins and ERC tokens.

As reported by CryptoSlate previously, all smart contract blockchains have their own stake in the DeFi ecosystem - Tron has JUST, Bancor operates on EOS, and even Bitcoin acts as a transaction medium for crypto exchange and financial services company Abra.

Importantly Ethereum is unlikely to succeed without the introduction of scaling improvements.

Transaction fees have quadrupled from the end of April to the middle of May, crowding out some applications and individuals from participating in the Ethereum ecosystem.