There is no doubt that the impact of the Celsius Network withdrawal freeze, the recent collapse of LUNA, and market downturn has sent a crippling shock wave through the DeFi sector. The exit of tens of billions of dollars has sparked many conversations around the DeFi space and how it operates.
Celsius was at one point in time managing 12 billion in assets and served nearly 2 million users before outgoing liquidity began to outpace incoming liquidity, forcing the network to halt transactions on the network. Coupled with numerous highly-complex positions propping up the mechanisms of the network itself, things began to crumble at an alarming rate. Like many systems that are reliant on a network of subsystems, the downward momentum of the market coupled with the LUNA collapse sent the market into a tumble.
According to DeFi Pulse the beginning of 2022 saw the DeFi space sitting with roughly 100 billion dollars. Now this number sits at a little over 37 billion, nearly the same levels as a year previous in 2021.
Sigma Labs is Moving Forward
At Sigma Labs we remain unaffected by the recent events in the DeFi space and will continue to develop our plans for the platform and the various mechanisms that make up Sigmadex and SigmaFi. We remain focused on concentrating our efforts towards building our project based around logic and longevity at its core. A self-stabilizing ecosystem which is mathematically driven will help mitigate volatility and uncertainty of this magnitude.
Planning for the future
The unfortunate fallout from Celsius further bolsters our reasoning behind the implementation of logical game theory aspects which are driven upon on a penalty/reward system. When penalties are taken and put back into the ecosystem, a self-stabilizing solution can emerge, one that would have served the DeFi space well before this event.
The continual evolution of DeFi has seen many ups and downs, and will likely continue this way as new solutions are crafted and implemented. As the DeFi community continues to refine the approach to a sustainable financial system its events like these that we all have to work through.
There have been countless examples where people have approached the DeFi sector looking to make quick profits, foregoing the effort it takes to fill real gaps in the market. This has fueled the demise of many projects, leaving communities of retail investors left holding the bag. Without a credible and trustworthy DeFi ecosystem this unfortunate cycle of events will only continue, furthering to tarnish the DeFi space.
The DeFi community is a source of inspiration for many and drives people and companies all around the world to create projects that serve as viable financial solutions. We as a community can work together to create lasting change in the DeFi space through better platforms, ideas, and cooperation.