Analyst says DeFi and stablecoins held up well as crypto markets imploded

DeFi showed tremendous strength during last week’s sell-off as DEX activity and stablecoin stability prove the sector may be ready for mass adoption.

The decentralized finance (DeFi) sector faced its first real challenge during last week’s market sell-off that saw more than $1 trillion wiped from the global cryptocurrency market cap as traders feverishly ran for the safety of stablecoins amid tumbling prices. 

Despite rapidly declining token prices, the nascent DeFi sector held its own as decentralized exchanges experienced a record $11.7 billion in trading volume on May 19. Uniswap (UNI) led with $5.7 billion in volume, followed by SushiSwap (SUSHI) which saw $2.8 billion in 24-hour trading volume.

Daily DEX volume. Source: Dune Analytics

According to the recent DeFi Uncovered report from Glassnode, blue-chip DeFi tokens including, UNI, SUSHI, Maker (MKR), Aave (AAVE) and Compound (COMP) have largely mirrored the decline of Ether (ETH) over the past two weeks, “showing relatively high beta to ETH but not exceeding the decline from ATH by more than 15% from the decline of ETH.”

New users increase despite declining TVL

The pullback in prices, combined with users removing liquidity and rotating into stablecoins led to a 42% decline in the total value locked on smart contracts, which also closely tracked the falling price of Ether.

Total value locked in smart contracts vs. ETH/USD. Source: Glassnode

TVL is intrinsically tied to the underlying value of the deposited tokens and given that Ether is one of the main tokens locked across DeFi platforms, the falling TVL has less to do with users removing funds and is mostly related to the pullback in prices.

Throughout last week’s downturn, the percentage of the Ethereum supply locked in smart contracts remained above 23% while the supply on exchanges “jumped from 11.13% to 11.75%.”

Despite falling prices, new users continue to enter the DeFi ecosystem and the total number of unique 30-day traders on the top DEXs surpassed the 1 million mark for the first time amid last week’s sell-off.

Unique DEX traders. Source: Glassnode

Uniswap is the clear leader with 815,000 unique users between April 24 to May 23, while 1inch (1INCH) came second with 78,200 users and SUSHI ranked third with 10,900 users.

Stablecoins hold their pegs

Much of the strength seen in DeFi during the sell-off can be attributed to the healthy stablecoin market and the ability for major stablecoins like USD Coin (USDC), Tether (USDT) and Dai (DAI) to maintain their dollar peg “for the majority of the crash with volume-weighted average prices (VWAP) staying at $1.00 the majority of the time.”

DAI price vs. USDT price vs. USDC price. Source: Glassnode

The performance of DAI was seen as “especially positive for DeFi” according to Glassnode, as its circulating supply was able to adjust accordingly in response to collateral requirements and protocol stability. The report also highlighted that reclaimed collateral and DAI were removed from the supply as redemptions were claimed by collateral holders.

Posey said:

“This behavior allows collateral to stay healthy, liquidations remain at a healthy level, and DAI to maintain its peg.”

The one stablecoin that struggled to maintain its peg was TerraUSD (UST), which lost its peg on May 18 as the value of its collateral from LUNA fell below that of the stablecoin it collateralized. This led to “unhealthy behavior in its lending market Anchor (ANC),” causing a higher than average number of liquidations on the protocol’s native lending platform.

Overall, stablecoins performed their intended function and pegs held steady across the ecosystem with the on-chain stablecoin transfer volume reaching a record $52 billion during the height of the sell-off.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Range-bound Bitcoin price opens the door for altcoins to move higher

Bitcoin remains pinned below $58,000 while Ethereum price soars to new highs and the number of ETH held on centralized exchanges falls.

Ether (ETH) took charge as a new month begins and the second-largest cryptocurrency by market capitalization rallied to a new all-time high at $3,338. This has many analysts shouting out that a new ‘altcoin season’ has commenced. Meanwhile, Bitcoin  (BTC) price is continuing to meet resistance around the $56,000 to $58,000 level. 

Data from Cointelegraph Markets and TradingView shows that since dropping to a low of $2,160 on April 25, the price of Ether has rallied 54% to a new record high at $3,324 on May 3 as Monday’s 12% spike lifted the top altcoin above the $3,300 level for the first time in history.

ETH/USDT 4-hour chart. Source: TradingView

While a majority of crypto traders are celebrating Ether’s price breakout, which has helped elevate project co-founder Vitalik Buterin to the crypto billionaire club, bearish traders are en route to heavy losses as nearly every one of the 76,000 put option contracts that are set to expire on April 7 will become worthless if Ether price manages to stay above $3,100.

And it’s not just Ether that has been performing well as of late. In the past 2 months, the altcoin market as a whole has seen its value increase 119% and flipped the 2017 peak into a new support level.

Ether HODL rates rise

According to Glassnode, an on-chain analytics firm,  the amount of Ether being held long term has been on the rise since late 2020 and this could be a contributing factor propelling the multi-month rally.

Ethereum HODL waves. Source: Glassnode

The chart above showing “Ethereum HODL waves” indicates that “coins appear to be maturing from 1-week to over 6-months old since late 2020 (blue arrows),” with the “proportion of coins aged 1-month to 6-months progressively increasing in thickness suggesting HODLing coins accumulated in the early bull market remains a favored strategy.”

Glassnode also pointed out that a large volume of Ether has been removed from exchange wallets in 2021, with 10 instances of withdrawals in excess of 200k Ether per day taking place in just 4 months as institutional demand and decentralized finance (DeFi) use grows.

Ethereum supply in smart contracts vs. balance on exchanges. Source: Glassnode

As seen on the chart above, the amount of Ether held on exchanges has been on the decline since September 2020 which coincided with a noticeable increase in the amount of Ether held in decentralized finance smart contracts.

Currently, the amount of Ether locked in smart contracts is outpacing the amount held in centralized exchange reserves.

Altcoins outpace Bitcoin for now

With Bitcoin still struggling to secure a daily close above $58,000, altcoins continue to make the case for an emerging altseason.

Daily cryptocurrency market performance. Source: Coin360

Waves (WAVES) was the breakout star of the day with its token price surging 41% to a record high at $36.41. Ethereum Classic (ETC) also rallied 15% to a new all-time high at $50.90.

After rallying 17.84% to $5,777 in the past 24-hrs, Maker (MKR) is now the top-ranked decentralized finance (DeFi) protocol with a total value locked of $10.92 trillion.

The overall cryptocurrency market cap now stands at $2.29 trillion and Bitcoin’s dominance rate is 46.6%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

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DeFi tokens are oversold but revenue and TVL show traders expect a bounce

The pullback in the value of and Aave signals that the DeFi market may be oversold but increasing revenues of the top projects suggests otherwise.

Over the last month the crypto market has seen a significant amount of volatility as a 6-month altcoin bull market abruptly came to an end with the most recent Bitcoin (BTC) price rejection at $12,000.

At the same time, the DeFi sector saw an amazing run as the total value locked in DeFi platforms surged above $10 billion but at the time of writing the sector is in the midst of a mild correction.

DeFi index daily, weekly, monthly gains. Source:

DeFi index daily, weekly, monthly gains. Source:

As reported by Cointelegrah, when Bitcoin (BTC) and Ether (ETH) started to pull back in late September, DeFi tokens crashed in tandem. Then U.S. President Donald Trump’s unexpected COVID-19 diagnosis put additional pressure on the DeFi market.

Despite this, Maker (MKR), Uniswap (UNI), (YFI), and other decentralized finance (DeFi) tokens saw their values plunge in the past two weeks. Yet, various data points show that the fundamentals of major DeFi tokens remain strong.

Most notably, Maker, Uniswap, and Aave saw their revenues spike by 130% to 440% within the past 30 days and this occurred as the prices of their underlying tokens fell substantially.

Major DeFi tokens may be oversold

It is difficult to measure the value of DeFi projects based on fixed metrics because each is structurally different but the two most widely utilized metrics are revenue and total value locked (TVL).

Revenues show how much capital a DeFi project is making from their products and it is an efficient metric for gauging general user demand and market sentiment.

The TVL shows how much capital is locked in the DeFi protocol, typically demonstrating investor confidence along with the project’s share of the market. TVL is also loosely associated with the liquidity and volume of the various staking pools.

Revenue change versus token price change of major DeFi networks. Source:

Revenue change versus token price change of major DeFi networks. Source:

As shown in the chart above, in the past 30 days the revenues of major DeFi protocols soared. Yet, the price of the underlying DeFi tokens plunged by 20% to 82%. For example, Maker dropped by 24% in the last 30 days but in the same period it recorded a 449% increase in revenue.

If a project’s TVL is stable and the revenues are increasing, a major price plunge likely signifies extreme caution in the DeFi market. Similarly, Uniswap and Aave recorded a steep price slump, while they both recorded over a 235% increase in revenue.

Jeff Dorman, the chief investment officer at Arca, explained that fundamentals do not necessarily move with the price. Citing the revenue change of DeFi protocols in contrast to token prices, Dorman wrote:

“Price and fundamentals don’t always move the way you’d think. DeFi is a great example this month. According to data from Messari and Token Terminal, here are 30-day changes in Revenue for select DeFi protocols, compared to their 30-day changes in Price.”

In the medium term, Dorman emphasized that it is the “perfect” setup for value investors. It shows which projects have fundamentals that outweigh the recent price wreck from the crypto market correction. He noted:

“Not all tokens are created equal. Some accrue no economic value regardless of earnings, while others directly accrue value when earnings increase. This is a perfect setup for value investors — the sector is collectively dumping, but there will be long-term winners and losers.”

TVL and daily DEX users continues to rise

On-chain data from Digital Assets Data indicate that the TVL of the DeFi market remains relatively unchanged. While most DeFi tokens dropped by 30% to 50%, the TVL has remained above $10 billion.

Total value locked in DeFi. Source: Digital Assets Data

Total value locked in DeFi. Source: Digital Assets Data, for instance, saw its native YFI token drop by 44% within five days and the digital asset is currently 56% down from its peak.

Despite this startling decline, investors and analysts remain strongly bullish on the project and earlier this week the team revealed that it plans to release new stablecoin vaults.

Further proof that token price is not a reflection of a project’s viability comes from Defipulse data showing with a TVL of around $700 million, a figure which is close to its TVL in August when the price was much higher.

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Makerdao Vote to Not Compensate Black Thursday Victims Receives Harsh Criticism

Large Makerdao holders decided not to compensate the victims that were liquidated during the unexpected flash crash that took place on March 12, otherwise known as ‘Black Thursday.’ An aggregate total of 38 votes was cast and more than 65% of the governance portal participants voted for zero compensation. The day after March 12, otherwise […]

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Total Value Locked in Defi Surpasses $4 Billion, ETH Up Over 70% Last 30-Days

Total Value Locked in Defi Surpasses $4 Billion, ETH Up Over 70% Last 30-DaysStatistics show that the decentralized finance (defi) economy has grown massively this year as the total value locked (TVL) in defi recently surpassed $4 billion. Between dex platforms, derivatives, stablecoins, lending, and non-fungible asset creation the second quarter of 2020 has propelled the Ethereum network to new heights. Decentralized finance (defi) is a term used […]

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