The billionaire owner of the Dallas Mavericks has gone big into crypto and DeFi. In a blog post titled “The Brilliance of Yield Farming, Liquidity Providing and Valuing Crypto Projects”, he has simplified the process of liquidity provision and yield farming.
DeFi yield farming exploded onto the scene in mid-2020 when the Compound Finance protocol launched its governance token, becoming the first platform to do so.
Cuban has been bullish ever since and kicked off his appraisal of DeFi with:
“The principle behind why they are brilliant also applies to other crypto projects, but lets put that aside … This is how I see the market and there may be things that I am wrong about or could change by the time you read this.”
Crypto Businesses make more sense than you think and valuing tokens is easier and makes more sense than you think . They are just businesses like any other , with a few HUGE advantages. My blog post on the matter https://t.co/uICS2H9JGs
— Mark Cuban (@mcuban) June 14, 2021
Naturally, Cuban highlighted the Layer 2 aggregator Polygon first as he is heavily invested in it. His analysis approached the protocol from a business angle explaining what it does and why it is worth investing in.
He compared it to Amazon’s cloud services which are highly centralized and designed to increase profits for the company and its shareholders.
“But blockchain based businesses diverge quickly from traditional software and the difference is where the brilliance of crypto based businesses like Polygon/Matic and their competitors, from BTC to ETH and even to Doge coin come in.”
Cuban added that if DeFi protocols took a centralized business path where they controlled and owned everything, they would have had to raise not just millions but potentially much more.
“Instead, they create a near zero cost token that they distribute in accordance with the tokenomics they defined to their community.”
The entrepreneur then goes on to explain decentralized exchanges, automated market makers, and how liquidity provision works. Cuban concluded that DeFi rocks because it does not focus on profits for the company:
“But their mission is not to maximize profits because in almost every crypto based organization, they are decentralized. Every token is created equal. No matter who owns it.”
Cuban’s 2021 in Crypto
Mark Cuban has made the headlines a number of times so far this year. In February he said that the HODL ethos of Bitcoin traders helped him support the Reddit group that took a stand against the Wall Street whales.
In May, Cuban went bullish for Ethereum, giving his reasons why it could eventually ‘dwarf Bitcoin’.