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Ethereum-backed DeFi Records Healthy Activities Amid Crypto Market Crash: Glassnode

Godfrey Benjamin   May 27, 2021 08:21 2 Min Read


The global cryptocurrency market capitalization was still down by $1.7 trillion after dropping from a high of about $2.6 trillion a few weeks ago.

The market's decline was attributed to some unfavourable narratives contributed, including an environmentally unfriendly mining process. While Bitcoin (BTC) shed off a significant part of its valuation, a recent Glassnode report x-rays how Ethereum based DeFi ecosystem responded to the crash.

DeFi Maintained its Resilience With Positive Trading Volume

The Ethereum-backed DeFi ecosystem recorded a resilience in terms of the on-chain transactions amidst the extreme volatility. The report highlighted that “liquidation and arbitrage mechanisms worked as intended, maintaining stability while stablecoins held their peg, seeing massive transfer volume and use across the ecosystem.”

As prices raced to the bottom, most tokens, including UNI, MKR, AAVE, COMP, SUSHI, and SNX, showed a bearish correlation with Ethereum. The Total Value Locked (TVL) plunged by about 42%, in contrast to Ethereum that slumped 51%.

TVL-1.png

Trading activities on decentralized exchanges (DEXs) soared, with Sushiswap recording a massive volume compared to other exchanges. However, Uniswap leads the rank in terms of the total number of traders who actively conducted a transaction.

tradersunique.pngStablecoins Maintained their Pegs

During the recent market slump, stablecoins such as the USDT and DAI maintained their pegs, with volume-weighted average prices (VWAP) staying at $1.00 the majority of the time. However, the USDT/USD pair ranged from a high of $1.02 to a low of $0.99. The stability of stablecoins is essential to keep the balance in the market in general. A very volatile stablecoin is bad for key DeFi products such as lending, whose collaterals and rates are determined using stablecoins.

Despite Ethereum powering the DeFi ecosystem in general, ETH proved insufficient to shield the entire assets running on it away from dropping low in value. Per the report, an extended DeFi bear period may be required to validate the sustained trading activities experienced during the crash. At present, the TVL of Ethereum backed DeFi, according to DeFi Pulse, is pegged at $63.96 billion. 


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