NEO and Flamingo will not surpass Ethereum so easily.

IN BRIEF

  • Flamingo passes to NEO in order to usurp Ethereum.
  • Its centralization problems could get in the way.
  • The FML’s share price has fallen by almost 40% since its registration on Binance.

Lately, not a week has gone by without another DeFi protocol trying to usurp Ethereum by launching itself on a rival blockchain. The latest to date turns out to be Flamingo Finance on NEO. Like all those who preceded it, this protocol aims to extract liquidity from its rivals.

It didn’t take long for NEO to get into DeFi with its own offer. This arrived in the form of Flamingo Finance, launched on September 23rd. NEO was presented as the „Chinese Ethereum“, but failed to make a name for itself despite its growing efforts in research and development.

Its new DeFi protocol consists of a global, cross-channel asset gateway called Wrapper, a Uniswap-like liquidity provider called Swap, and a MA called Perp. It also has a Vault asset manager, a synthetic stable corner called FUSD and a DAO for platform governance.

Flamingo Finance’s token, the FLM will be distributed to liquidity providers and used to strike FUSDs that can then be used for margin operations on perpetual contracts. The total offer will be 150 million NEP-5 standard FLM tokens, 20% of which will be listed on Binance’s Launchpool on September 27th.

Flamingo Finance’s latest press release states that liquidity has now reached $1.6 billion, which is equal to that deposited in Uniswap’s four ETH pools.

NEO’s founder, Da Hongfei, has followed in Binance’s footsteps and has been very involved in the platform’s activities lately.

Adam Cochran, partner of Cinneamhain Ventures and DeFi industry expert, described the action as a vampire attack against Ethereum. In his Twitter thread, he began by pointing out that NEO had recently suffered a blackout, with transactions being „blocked“ on the channel.

Cochran also pointed out that Flamingo is highly centralised due to its involvement with two of the largest crypto companies, Binance and OKEx, adding that 50% of the emissions from their new „DeFi“ system go to NEO, BNB and OKB holders.

He added that any liquidity that goes into the FLM will have a return because there is no reason to hold ETHs in an alternative network where they cannot be used: „This is the most sophisticated attack against ETH we have seen and it is a complete flop“.

Another factor he did not mention is the prevalence of „yield hopping“. This means that the same money flows continuously through the DeFi ecosystem and ends up in the last and best opportunity, until the cash providers move on once the revenue is exhausted. This has been observed with SushiSwap and Uniswap in particular.

At the time of writing, the LWF was trading at $0.83 after peaking at $1.19 on September 28. The NEO is currently trading at $19.90, down 23% from its September high of $26.