Gartner blockchain hype cycle: Only crypto trading is a killer use case – Ledger Insights

On Friday, Gartner unveiled its latest blockchain and web3 hype cycle. A related blog post claims that cryptocurrency trading is the only killer app so far. Not surprisingly, not everyone agrees, and the individual elements of the hype cycle are debated in several posts on Linkedin. [1][2]

“Consumer apps such as NFT games and commerce are driving innovation as businesses gradually begin to realize business value. A tipping point in adoption will soon be reached, as risks are proactively managed, says Avivah Litan in a blog post. And goes on to say, “apart from cryptocurrency trading, we still haven’t seen killer use cases yet. They have to leapfrog current applications when it comes to making our lives better.”

Perhaps the blog post was intended to stimulate debate.

While monkey images may grab the headlines with NFTs, the technology will have a major impact on almost all types of intellectual property, from art to music and games. And NFTs will underpin the future of brand loyalty. Not to forget that OpenSea alone traded more than 30 billion dollars in a year. But in fairness to Litan, a lot of that number was money from crypto trading. And while NFTs are promising, they are still niche.

It is possible to discuss each element of the cycle. But one comment in the blog post deserves more attention.

Blame CeFi for crypto crash?

The cryptocurrency crash is largely blamed on “corrupt players who lied to customers or lenders,” while DeFi protocols did not crash. There is no doubt that centralized cryptolenders were an accident waiting to happen with weak risk management. But what really saved DeFi is that it has essentially given up security (so far), and automated smart contracts protect security. In contrast, CeFi loans were under-pledged.

And DeFi is starting to move into unsecured loans.

Also, the clarification of many of the CeFi problems (with one major exception) started with DeFi. The collapse of the algorithmic stablecoin Terra USD – where the Anchor DeFi protocol offered 20% rates – was a key trigger, wiping out $50 billion plus in one fell swoop. It resulted in the losses that crippled Three Arrows Capital (3AC), and 3AC brought down Voyager Digital and caused massive defaults for Genesis loans and others. Not only that, but the de-pegging of Terra stablecoin started with an unbalanced Curve DeFi pool.

It’s worth clarifying because the “DeFi good, CeFi bad” message is overly simplistic and can lead people to blindly trust DeFi. Like they did with Terra/Luna. While DeFi is incredibly promising, it comes with significant risks, which will grow as DeFi becomes more complex and less transparent.