Is greed good? – How Exchanges Listing DeFi Tokens Are Terrible For The Crypto Sector
Fifty years ago, in an essay for The New York Times, the American economist Milton Friedman made a controversial statement that still rings true today. Under the title "The social responsibility of companies is to increase their profits"Friedman argued that" greed is good. " But is it always? A broader look at the horizons of DeFi it shows that what can be profitable now can be disastrous in the long run.
Following the market correction earlier this month, several local exchanges in China had trouble transferring assets to clients attempting to withdraw. The situation escalated around September 6 when Chinese merchants started a coin withdrawal campaign with the aim of transferring cryptocurrencies to more secure decentralized exchanges.
Reported by Chinese crypto journalist Colin Wu, the exchanges quickly retaliated after the campaign. Combined with the statistics showing great interest in DeFi and the Yield Farming in China at the time, exchanges decided to win back users by listing all kinds of tokens. Traders could find the same tokens on DEXs, however CEXs provided lower fees and greater liquidity.
At that point the point begins where greed is, in fact, no good. What happened in China last week is now happening with Western Hemisphere-based exchanges this week. Exchanges like Binance are listing DeFi and churning out agricultural tokens from left to right without any consideration.
Most of these projects only handled internal audits, leaving them vulnerable to tampering. Furthermore, Binance took the stance that users should be careful in this new free market and that exchanges should not bear any responsibility.
Zero responsibility, really?
Naturally, a free market in a new, unregulated industry does not work very well. By listing various DeFi tokens, the exchanges grant them legitimacy and significant price increases. Therefore, we have a situation where the same assets are transferred from one project to another. All of that sounds great in the mind of a profitable trader, but I want to repeat the most important point again, greed is not good.
At the end of a line that follows a new list of cards is a new community of "fishermen." If whales and "little fish" benefit from these lists, inexperienced new traders will suffer the downfall 99% of the time. With portfolios decimated, they lose confidence in the sector and mostly decide never to come back, as they lack the capital to continue their crypto career. In that sense, in fact, greed is not good, as the current situation can only last so long.
Green or greed?
That also leaves us with the question of, how can we allow once-respected exchanges to take a completely amateurish stance during this DeFi bubble? Taking a look at my Crypto Twitter timeline, I see daily listings for all kinds of exchanges. Sometimes I have to look twice at the chips as I can't really fathom how the trades fell so low.
The same exchanges can argue their free-market stance under the guise of decentralization, but who are they kidding? How can a centralized exchange push decentralization only when it suits them?
The irony in this whole situation reached such high levels that Binance tries to create the CeDeFi sector. You read well. Centralized decentralized finance. At any other time in the past two years, investors would have laughed at the idea. However, greed can disguise even the worst of oxymorons through public relations and marketing.
Four months after the DeFi bubble, it's too late to fix the market
The DeFi industry enjoyed its exponential growth starting in June. In just three months, investors blocked 10 times more assets than before. However, in late August there was a 'healthy correction'. Now, we are faced with the same old problems of high gas rates and exit scams. This leaves us with the answer to where the market will go next.
When and how low is still subject to speculation, but one thing is for sure, Bitcoin will not enter a bull run this year. Is it predetermined by the global economic situation or by greedy DeFi investors? We will never know. All that's left to do is witness the madness within the crypto community and watch investors go from being profitable to being in shambles. Remember, greed is "good."
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