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Is DeFi based on a false premise?

Is DeFi based on a false premise?

Etherum Reddit

Reddit / Etherum Reddit 22 Views

I'm a huge fan of the various DeFi protocols (MakerDAO, Compound, dYdX, Dharma and many more) that have sprung up on Ethereum - they show the power of composable protocols, smart contracts and retail finance.

However, one concern is that their success all seems to be based on the supposition that the value of ETH will rise (over the long term). Whilst this may be true for a while (or not ;-)), presumably at some point the value of ETH will stabilise.

Interest rates (e.g. for DAI, USDC) and DAI itself are based on over-collateralisation which really only makes sense if you're expecting the underlying to appreciate in value (or there is some value to holding the underlying, i.e. it is a house you can live in). Without that AFAICT protocols like MakerDAO & the other lending protocols don't really make any sense to use.

Interested in others thoughts here ;-)

submitted by /u/adamaid_321
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