Why investors are optimistic after "painful" DeFi correction despite YFI plunge

Despite the DeFi marketwide correction, investors are positive that the pullback occurred.

Kelvin Koh, a partner at the Asia-based cryptocurrency investment firm Spartan Group, said the DeFi correction was important.

Before the market plunged, the DeFi space was rampant with projects offering extremely high yields that were unsustainable.

As the DeFi market recovers, unsustainable trends and projects would likely subside.

"I am glad we went through that big DeFi correction. As painful as it was, it accomplished a few things: 1. Washed out the weak hands 2. Gave us a sense of where value for DeFi assets are in a big drawdown 3. Hopefully killed off random food coins offering 10000% APY farming."

Some attributed the trend to profits from the DeFi market cycling back into Bitcoin.

Others have been shorting YFI, UNI, and other DeFi tokens as a hedge as Bitcoin began to rally.

The confluence of an increasing number of investors shorting DeFi giants like YFI and the DeFi market's correction led to overall market stagnance.

The recent DeFi cycle mostly centered around yield farming, which requires significant technical knowledge.

The main roadblock in the next DeFi cycle remains to bring mainstream users on board.