DeFi’s Resistance against FTX Contagion
Believe it or not, only two weeks are remaining when the collapse of FTX shall be completed.
The liquidator, who has been assigned the task of completing the bankruptcy process and was given the title of CEO in FTX, noted extreme mismanagement in the firm.
On one hand, Sam Bankman-Fried, former CEO of FTX would be closely watching the demolition of the firm that he had self-established. However, on the other hand, crypto firms are under fear as to who will be the next.
While there is a huge impact of FTX’s contagion in the digital asset sector, it seems that decentralized finance (DeFi) is under no pressure at all. This unique sector is not only surviving but also thriving with exorbitant interest rates.
The sector is somehow been able to facilitate not only non-custodial trades but also liquidating less-collateralized credit facilities.
Considering the performance of even far-distanced DeFi projects such as Uniswap and Aave, it is obvious that their figures are exceptional. Since FTX’s contagion began, both of them have been able to put on an impressive display.
Users’ Nervousness Hiked DeFi Activity in Aave
For instance, a distinct spike took place approximately for an hour past week within the Aave activity.
Because of the spike, Aave users collected roughly 73% interest against GUSD i.e. a stablecoin of Gemini which is pegged with USD. The reason for the spike turned out to be ‘users’ nervousness’.
It all happened when on 16th November, Gemini issued a notice. In this notice, users were informed that their withdrawal requests will be responded because of the FTX fiasco.
This then created nervousness amongst the Gemini users who rushed to pull out their GUSD holdings and flocked to borrow underlying assets massively. Some even feared that borrowers would try to create a GUSD shortage.
Resultantly, lending rates went astonishingly high for tempting further liquidity at the platform.
How Uniswap Outperformed Coinbase?
Coinbase is undoubtedly the world’s number one crypto trading platform which was in competition with FTX. However, Coinbase ate the dust when DeFi-based crypto exchange Uniswap outperformed the world’s number one crypto trading platform.
Coinbase’s daily crypto trading volume is humongous and unparalleled. However, Uniswap was able to beat Coinbase in its own game when Uniswap’s daily volume exceeded Coinbase’s.
Again, it wasn’t a surprise in the continuation of FTX chaos that a powerhouse had been defeated by a lesser-powerful opponent.
FTX’s contagion has affected many aspects of the digital asset industry. One of them is that a large number of crypto exchange users have been pulling out their funds from exchanges.
Resultantly, there is a huge decline in daily trade volume across entire crypto exchanges and Coinbase is no exception.
The fact is that on one hand, the digital asset industry is currently dealing with the worst-ever scandal in its history. On the other, DeFi’s survival abilities are proving how important this sector is for the crypto industry.