The crypto market continues to present worst weeks, and the DeFi marketplace has incurred the heaviest losses.
DappRadar, and the industrial analytics platform, released data on this situation, and nothing looks lucrative about it. On 13 May, the firm revealed that the decentralized finance (DeFi) total value locked dropped over 40% within seven days.
DaooRadar highlighted that the crash came from investors swapping tokens into stablecoins as they prepare to withdraw into fiat. Nevertheless, the colossal price declines by digital tokens affected DeFi’s TVL. The reports by DappRadar showed a nominal total value locked of $83.4 billion, reflecting a 48% slump since the year started.
Terra Crash Spooks Investors
The report highlighted that Terra’s LUNA and stablecoin fallout triggered shockwaves across the DeFi industry. That’s contrary to what occurred during the 2018 bear market when cryptocurrency lending protocols recorded impressive performance.
Also, it revealed that the UST disaster impacted DeFi lending since the stablecoin’s fiasco triggered concerns from regulators and investors over the assets’ viability. UST traded near $0.145 at this publication, while the world’s leading stablecoin, Tether (USDT), hovered around its peg.
Circle’s USDC appeared untouched this week, even trading beyond its peg slightly. DappRadar observed that USDC’s trading magnitude exploded within the past couple of days, peaking at around $25 billion on 13 May. Remember, the typical stablecoin volume hovers at about $5B per day.
Though market participants may throw stablecoins future into doubt, they should remember that, unlike UST’s crypto assets backing, most stablecoins use assets with tangible support.
DeFi Tokens Slump
CoinGecko’s data shows DeFi-connected coins dropped around 47% within the previous week. The overall market capitalization of DeFi tokens was near $100B last week. Today, the figure stands at $52.7 billion, and many coins are in a bloodbath.
Top lending protocols saw their tokens on massive declines over the past seven days. AAVE lost 38% in a week, KAVA crashed 45%, and COMP lost over 32% within the previous week (DappRadar reports). Moreover, Uniswap’s UNI and Chainlink’s LINK lost approximately 34% each.
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