In brief

  • BitMEX CEO Arthur Hayes said yield farming strategies can attract retail participants.
  • He said the low returns provided by banks will cause the public to seek riskier investments.
  • The exchange owner holds a portfolio of the latest DeFi tokens.

Decentralized finance (DeFi) applications and “yield farming” projects promising annual returns of 1,000% may sound like scams. But for Arthur Hayes, CEO of crypto derivatives exchanges BitMEX, they present an opportunity.

In a blog titled “Dreams of a Peasant,” Hayes penned down his thoughts on the ballooning DeFi market and listed some points on how obscure smart contracts and funny-sounding altcoins can deem an attractive investment for risk-seeking investors in a world of low-interest bank rates—despite referring to them as “shitcoins.”

“The memes are hilarious (YAM, BASED, etc.), and the fact that these tokens are worth more than zero is a testament to the financial repression hoisted upon savers by the all-powerful central bankers,” said Hayes.

He added, “When faced with severe income inequality, and free money (for the fortunate), financial speculation will surge. Would you rather work for 30 years for stagnant to negative real income gains in service to a mega-corporation, or would you rather come to play in the intellectual casinos that are the financial markets?”

Hayes referred to the grim economic outlook that befalls the financial systems of today, spurred by factors like rising inflation, incessant money printing, and the ill-effects of the ongoing coronavirus pandemic. The latter has, particularly, resulted in widespread job losses, business shutdowns, the lack of work opportunities, and even shaved the valuations of global banking players by trillions of dollars.

But that can lead to a scenario where trading “worthless memes” under the guise of technology “ceases to be so daft,” Hayes said.

“While the majority of activity is economically wasteful, the underlying ability to build an ecosystem of dApps enabling programmable finance is a big improvement over the slow, analog, [and] expensive legacy financial system,” he wrote.

Describing the swathe of yield farming apps as a “DeFi proto-bank,” Hayes said the returns, the opportunities, and the apparent lure of quick profits will usher in an era of inclusive banking services, one where all users can put up their savings to lend out to interested parties and earn annual interests rates of at least 10%.

Meanwhile, the exchange owner cautioned against additional volatility in the traditional and crypto markets as the US elections play out starting October. But he predicts the ensuing mistrust and chaos to ultimately benefit two behemoths: gold and Bitcoin.

With a side order of digital vegetables, of course.