Analyst Miles Deutscher predicts that despite the growth of the restaking sector, Decentralized Finance (DeFi) schemes resembling Ponzi structures may not see a comeback in 2024. The most significant event of the year, according to Deutscher, might be the EigenLayer airdrop. This event is anticipated to ignite a rush for high yields akin to the DeFi Ponzi schemes of the past. Deutscher believes that the restaking narrative, coupled with technologies such as artificial intelligence, BRC-20, GameFi, and decentralized infrastructure, will be among the most lucrative trends to monitor.
Prominent Crypto Analyst Cautions Investors
Deutscher argues that projects like EigenLayer promote the practice of staking cryptocurrencies on multiple blockchains, leading to increased productivity of assets. This allows investors to simultaneously engage with various blockchains and reap rewards from all. He characterizes this process as yield enhancement. However, Deutscher warns that on the surface, projects like EigenLayer, with their tokenomics, resemble Ponzi schemes, and questions their long-term viability.
Despite skepticism, restaking platforms have amassed a total value locked (TVL) of 2 billion dollars since inception. Leading the charge are prominent applications such as KelpDAO, ether fi, and Renzo, all part of EigenLayer, which have collectively drawn investments of 800 million dollars.
Critical Views on DeFi and Regulatory Responses
In 2022, Forbes likened DeFi staking to Ponzi schemes, pointing out that these projects rely on a continual influx of investors to sustain the staking token’s value. The U.S. Commodity Futures Trading Commission has also criticized platforms like Opyn, ZeroEx, and Deridex for illegal activities, emphasizing the misuse of advanced technology in the crypto sector. The agency has advocated for more stringent DeFi regulations.
In a related enforcement action, the U.S. Department of Justice charged the founders of the DeFi project Forsage in 2023 for orchestrating a 340 million dollar Ponzi scheme. The Web3 social media platform Friend tech was similarly indicted for its pyramid scheme-like operations.