“DeFi the Most Painful Trade of the Year”: VC Veteran Jason Choi on Bear Market

Forbes 30 Under 30’s Mr. Jason Choi, who co-helmed Spartan Group, the most successful Web3 VC fund of the APAC region, shared his analysis of the ongoing “bottom” of the Crypto Winter.

New-gen DeFis decimated by bear market

According to statistics shared by Mr. Choi, all types of utility and governance assets associated with the decentralized finance segment have suffered the most amid this recession.

1/ DeFi is the most painful trade in the past year.

Looking at the DEX vertical alone, we have had the most prolonged bear market out of most verticals – median of 400 days since ATH, compared to BTC’s 207 days.

On the bright side: value is starting to look attractive.

— Jason Choi (@mrjasonchoi) June 4, 2022

Unlike Bitcoin (BTC), they peaked in May 2021, not in November, 2021; as such, their bear market lasts for 400 days instead of 207 days. Even top-tier DEXes saw their assets plummeting by 90% on average.

At the same time, “new DeFis” or “DeFi 2.0” protocols, including the likes of Redacted Cartel (BTFRLY), Olympus (OHM) and Wonderland (TIME), are affected even more dramatically: they lost over 98.5% on average.

Some protocols of the overhyped Solana (SOL) ecosystem—such as AMM-powered DEX Saber Protocol (SBR) and Step Finance (STEP) DeFi protocol—lost over 99% compared to the ATH.

ATOM ecosystem is safe haven?

Traditionally, Layer 1 protocols (L1s) demonstrare lower volatility compared to DeFi tokens. Ethereum (ETH) and Tronics (TRX) are the two most stable assets with 63.5% and 65.4% losses.

Overhyped coin MINA, which made headlines with its post-launch rally, is the only Layer 1 protocol that lost over 90%.

Also, Mr. Choi noticed that the ecosystem of Cosmos (ATOM), a sophisticated cross-chain architecture, demonstrates “defensive” price performance amid the market carnage.

The investor is not certain about the exact roots of such a phenomenon; this can be attributed to lower involvement of VC funds.


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