- Tezos co-founder Kathleen Breitman is not a fan of DeFi yield farming.
- In an interview with Insider, she said it will “age like milk.”
- Breitman also shared her thoughts on the role digital assets will play in the future.
Proponents of Ethereum-based decentralized finance (DeFi) often cite the attractive returns users can earn from lending their cryptocurrencies as one of their selling points.
Compared to the return prospects currently available in many areas of traditional finance, DeFi offers investors a chance for meaningful returns, even if that return comes in the form of the same hypervolatile cryptocurrency that users lend. Yield farming protocols to automatically identify where the best odds are in the area on any given day have recently become increasingly popular.
But yield farming isn’t entirely Kathleen Breitman’s thing. That might come as a surprise considering she’s a co-founder of the Tezos (XTZ) cryptocurrency and is happy to point out that she thinks it’s even more decentralized than Ethereum because it allows token holders to propose changes to their network and to ratify.
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So why the pessimism about yield farming? Breitman described borrowing and lending cryptocurrencies as a kind of circular dead end for investors, and that people would get bored of it within months.
“Basically, if you go on chat forums and talk about what yield farming is, it’s a way of distributing a token by artificially creating a very weird distribution mechanism that’s a big incentive for first-timers,” Breitman said on Monday to Insider.
“So in the end, what remains is a distribution model for just one token on one token. And then what do you do? You deal with it. That’s the whole game: You get the tokens, you trade the tokens, “You get the tokens again, you trade the tokens again,” Breitman continued.
She added: “It’s not at all different from what many ERC20 coins were tokenized in the so-called ICO trend in 2017.”
It should be noted that some of the largest yield farming markets are on the Ethereum network, which could be seen as a competitor to Tezos.
The role of DeFi in the future
While not a fan of yield farming, Breitman sees a longer future for other areas of crypto. This includes some insurance protocols and stablecoins in DeFi. Stablecoins are cryptocurrencies pegged to government-backed currencies like the US dollar.
“Stuff that’s basically courting players by talking about how much yield you’re going to get artificially over the course of a few weeks is utter madness and that’s going to age like milk,” she said. “But I think a lot of the algorithmic stablecoins have come to the fore and evolved over the past 18 months, and that’s definitely going to be a thing in the next few years.”
More broadly, Breitman said it’s unlikely that cryptocurrencies will ever have the dominance or default quality that fiat currently has in society, but that features of the assets — such as the faster payments enabled by blockchain technology — continue to enter the financial system to get integrated.
“In terms of the better money promise, we’re already seeing a lot of opportunities for cryptocurrencies to be plugged into the more convenient pipelines in the financial system,” she said. “In the last two years, there has been so much progress in traditional financial institutions that they have recognized this and tried to integrate it into their pipeline.”
She added, “Programmable money is a class of its own that I don’t think we’ve tested the limits of in any meaningful way.”
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