The decentralized finance (DFI) sector faced its first real challenge during last week’s market sell-off, which wiped out more than $ 1 trillion from the global cryptocurrency market cap as traders stagnated amid rapid price declines. Race to protect the stock.
Despite the rapid decline in token prices, the nascent Daffy sector in the form of decentralized exchanges experienced a record $ 11.7 billion in trading volumes on 19 May. Uniswap (UNI) led with $ 5.7 billion in volume, followed by Sushi Swap (SUSHI) with a turnover of $ 2.8 billion. 24-hour trading volume.
According to Glasnod’s recent Defy Uncovered report, blue-chip Defy tokens, UNI, Sushi, Maker (MKR), Aave (AAVE) and Compound (COMP) largely reflect ether degradation (ETH) Over the past two weeks, “showing relatively high beta to ETH but not exceeding the decline of ETH by more than 15% from ETH.”
New users increase despite decline in TVL
The drop in prices, removal of liquidity with users and revolving in stable stocks led to a 42% drop in the total value locked on smart contracts, which also closely tracked the falling price of ether.
TVL is intrinsically linked to the underlying value of deposited tokens and given that Ether Defy is one of the main tokens locked onto the platform, falling TVL has less to do with users withdrawing funds and most prices Is related to pullback.
During last week’s decline, the percentage of closed Ethereum supply in smart contracts stood above 23%, while supply on the exchanges “increased from 11.13% to 11.75%.”
Despite the price drop, new users continue to enter the DeFi ecosystem and the total number of unique 30-day merchants on the top DEX has crossed the 1 million mark for the first time among last week’s sellouts.
Uniswap is the clear leader with 815,000 unique users between April 24 and May 23, while 1inch (1INCH) ranks second with 78,200 users and SUSHI with 10,900 users.
Stablecoins hold their pegs
Much of the strength seen in DIFI during the sell-off can be attributed to the healthy stable currency market and the ability of major stable stocks such as USD Coin.Usdc), Tether (USDT) And Dai (DAI) to maintain their dollar pegs “with volume-weighted average prices (VWAPs) for most casualties to remain at $ 1.00.”
According to Glasnod the performance of DAI was seen as “particularly positive for DIFI”, as its circulating supply was able to adjust accordingly in response to collateral requirements and protocol stability. The report also stated that the reclaimed collateral and DAI were removed from the supply as redemption was claimed by the collateral holders.
“This behavior allows the collateral to remain healthy, liquidation stays at a healthy level, and DAI maintains its pegs.”
One stable currency that struggled to maintain its peg was TerraUSD (UST), which lost its peg on 18 May as the value of its collateral from LUNA fell below the stable currency it had collateralized. This led to “unhealthy behavior at its lending market anchor (ANC)”, leading to higher-than-average liquidation on the protocol’s core lending platform.
Overall, the stable stock fulfilled its intended function and remained stable throughout the ecosystem and the volume of on-chain fixed currency transfers reached a record $ 52 billion during the height of the sell-off.
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