UNI, AAVE, MKR and YFI are some of the top performing DeFi tokens right now. While DeFi has grown dramatically in the past few months and Cardano has re-released its smart contract mainnet, the excitement has reached unprecedented levels. Even so, the DeFi market has lost a lot of its value. At the same time, these altcoins also lost a lot.
TVL DeFi reduced
The Total Value of the Key (TVL) in DeFi has dropped roughly $ 11 billion this week from $ 100 billion. This is not entirely new, because after a spike in February and May, it already happened twice at the beginning of the year: it fell by $ 18 billion in February and by $ 19 billion in May.
However, at $ 87 billion, this is still as high as ever so there is nothing to worry about.
TVL DeFi | Source: DeFi Pulse
Coupled with the TVL decline, the DeFi Pulse Index (DPI) is down 16.62% as of press time – still well below its worst of -24.01%. Still, looking at the top performing DeFi assets like UNI, AAVE, MKR, and YFI brings more concerns.
In the past 5 days, each of these tokens has fallen more than 20%. UNI fell 26.86% – the most.
UNIVERSITY down by 26% | Source: TradingView
So which property is the best?
Although UNI is falling the most, it has the strongest network performance. The MVRV ratio and network value to transactions show the complete dominance of Uniswap over other altcoins.
MVRV of coins | Source: Coinmetrics
In terms of investor participation, UNI was once again in the lead, followed by AAVE, YFI and MKR. Uniswap also performed best in terms of daily active addresses and number of transactions.
Active address of coins | Source: Coinmetrics
But in terms of profits, the rankings have changed. MKR is currently the most profitable. YFI and UNI followed him. Here, AAVE is considered a weak asset as its profitability is only 37%.
AAVE’s profit is 37% | Source: Intotheblock
However, there have been many other new updates lately. The UniCode Hackathon event has been announced to the Uniswap community. The Maker Foundation disbanded to make way for a completely decentralized network. Yearn Finance reported $ 868,000 in profit from its Treasury Yield Farming for the second quarter.
These increased prices and made the 3 Altcoins a better investment choice. So AAVE could be the coin to stay away from for now.
How does a low DEX volume affect investors?
Immediately after the September 7 incident, TVL fell noticeably on decentralized exchanges (DEX). As can be seen from the attached chart, up to $ 31.48 billion is locked on these exchanges until 9/7. However, on September 11, the number dropped to $ 26.1 billion.
The 16.8% decline mentioned earlier was the sharpest since June, and while the curve has changed direction and is now rising, note that it is still well below the $ 27 billion threshold.
Total Locked Value (USD) on DEXs | The source: DeFiPulse
The overall slight recovery was led by SushiSwap. According to data from DeFiPulse, this DEX is currently valued at over $ 4.06 billion, up 11% on the past day alone.
Curve Finance and Balancer’s TVLs also rose 4% and 3%, respectively, which were valued at $ 11.46 billion and $ 1.86 billion at press time. It is noteworthy that DeFi Projects presents pretty well restored DEXs compared to the others.
However, the daily volume of the DEX was unable to recover from the lows. As can be seen from the graph below, the cumulative volume of foreign exchange was above 5 billion before the crash, but is now below 2 billion. The volumes of Uniswap and SushiSwap in particular were hit hard, followed by Balancer. Interestingly, Curve’s volume has recovered from the low.
Daily DEX volume | The source: DefiPuls
Additionally, most of the major platforms mentioned above operate on the Ethereum chain and transaction fees are not that cheap so far. This factor also contributed significantly to the volume loss in retrospect. It should also be noted that the number of stablecoin transactions has not changed significantly. So it can be said that the severely stagnant nature of stablecoins has partly caused the decline in volume.
The rising gas costs for Ethereum are believed to be the main cause of the decline in trading volume on these DEXs.
Should HODLer predict declining returns?
The value of the tokens associated with these exchanges has also been severely affected. For example, UNI, CRV, SUSHI and BAL are down 22%, 6%, 23% and 24% over the past week. However, at the time of writing, all tokens are trading in the green thanks to 24 hour gains of 1%, 6.4%, 7% and 3% respectively.
The DEX room has seen several such crashes in the past and is recovering quickly. Accordingly, it would be fair to say that the present gloomy time will not last by itself. The recovery should come soon and HODLers will find even higher gains.
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According to AZCoin News