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Total Value Locked In DeFi Still Wobbling Despite Ethereum Recovery
Recent times have brought quite hardships for the overall cryptocurrency market, with even the leading crypto assets like Bitcoin (BTC) and Ethereum (ETH) facing price plunges.
And now there is a sign that there is a possibility that the investors are losing confidence in the future of Decentralised Finance (DeFi). This is because the total value locked (TVL) in the protocols in the sector has surged just by 5% despite the fact that the price of Ethereum (ETH) has rebounded by 30% after going considerably down recently.
Are Users In Skepticisms Over DeFi Future Potentials?
In simple terms, this signifies that the users are constantly removing assets from DeFi even though the price of tokens is showing recovery.
The bearish market has brought forward the risks in a lot of significant DeFi products, with yield farms, algorithmic stablecoins, and staking derivatives facing most of the bumps.
Specifically, if we talk about the algorithmic stablecoins, the last month painted a very clear picture of their uncertainty when the TerraUSD (UST) de-pegged, leading to Luna dropping to zero. Because they are not backed by any collateral, they can post quite spiraling losses if they fail to maintain the Dollar peg.
Whereas, when it comes to staking derivatives, they are also vulnerable to losing price parity with the asset they represent. For instance, Lido’s stETH staking derivative lost its peg recently while farmed tokens have posted high losses.
Data by DeFi Llama highlights that the TVL in DeFi protocols has slumped to $73.2 Billion, i.e. by approximately 71% since last December.
The vast Ethereum network solely represents two-thirds of the sectors’ total TVL. Though the network’s locked value is down over $100 Billion in the last seven months. And the Terra collapse cleared the path for the Binance Smart Chain (BSC) to reclaim its position as the second-largest chain in the entire DeFi ecosystem.
But maybe the situation wasn’t that bad for all. Tron is one such network that grew during the recent bearish trends and rose to the third place with around $4 Billion locked. But it was also wobbling in the DeFi space as it shredded over one-third of its value as the users drew back the capital from JustLend, its major DApp.
Then there were other networks like Solana, Avalanche, Fantom, etc. which suffered similarly to most others.
The current Total Value Locked (TVL) of the Ethereum chain is about $46 Billion.
Recent times have brought quite hardships for the overall cryptocurrency market, with even the leading crypto assets like Bitcoin (BTC) and Ethereum (ETH) facing price plunges.
And now there is a sign that there is a possibility that the investors are losing confidence in the future of Decentralised Finance (DeFi). This is because the total value locked (TVL) in the protocols in the sector has surged just by 5% despite the fact that the price of Ethereum (ETH) has rebounded by 30% after going considerably down recently.
Are Users In Skepticisms Over DeFi Future Potentials?
In simple terms, this signifies that the users are constantly removing assets from DeFi even though the price of tokens is showing recovery.
The bearish market has brought forward the risks in a lot of significant DeFi products, with yield farms, algorithmic stablecoins, and staking derivatives facing most of the bumps.
Specifically, if we talk about the algorithmic stablecoins, the last month painted a very clear picture of their uncertainty when the TerraUSD (UST) de-pegged, leading to Luna dropping to zero. Because they are not backed by any collateral, they can post quite spiraling losses if they fail to maintain the Dollar peg.
Whereas, when it comes to staking derivatives, they are also vulnerable to losing price parity with the asset they represent. For instance, Lido’s stETH staking derivative lost its peg recently while farmed tokens have posted high losses.
Data by DeFi Llama highlights that the TVL in DeFi protocols has slumped to $73.2 Billion, i.e. by approximately 71% since last December.
The vast Ethereum network solely represents two-thirds of the sectors’ total TVL. Though the network’s locked value is down over $100 Billion in the last seven months. And the Terra collapse cleared the path for the Binance Smart Chain (BSC) to reclaim its position as the second-largest chain in the entire DeFi ecosystem.
But maybe the situation wasn’t that bad for all. Tron is one such network that grew during the recent bearish trends and rose to the third place with around $4 Billion locked. But it was also wobbling in the DeFi space as it shredded over one-third of its value as the users drew back the capital from JustLend, its major DApp.
Then there were other networks like Solana, Avalanche, Fantom, etc. which suffered similarly to most others.
The current Total Value Locked (TVL) of the Ethereum chain is about $46 Billion.
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Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
