These Five Indicators Show How the Crash in Bitcoin and Ethereum Prices Has Affected DeFi
Let’s call it for what it is, the last few weeks in crypto have been a bit more than a correction. The recent crypto crash has had ripple effects across the entire ecosystem. One area that has been particularly reactive to the movements in large cap cryptos has been the decentralized finance(DeFi) space. A lot has been written about DeFi volumes in the last few weeks but what other side effects have been visible. Today, I wanted to drill down a nudge and showcase some interesting indicators that quantify and adds a different perspective to the last few days of the DeFi market.
1) Bitcoin Locked On DeFi has Declined
IntoTheBlock’s Bitcoin Locked on Ethereum indicator is a clear metric of the momentum in the DeFi space as it signals the volumes of Bitcoin that are looking for better returns in DeFi protocols. In the last few days, this indicators has shown some signs of slowing down, which is a direct reaction to the market downturn.
2) Gas Costs Skyrocketed Yesterday
Yesterday mid-day market drop reflected in a spike in gas prices. IntoTheBlock’s Gas Cost indicators show that around noon US EST gas cost in the Ethereum blockchain reached disproportionally high levels.
3) Liquidity in AMMs has Dropped
The decline in DeFi volumes has clearly been reflected in the liquidity provided to AMMs. IntoTheBlock’s Liquidity indicators for SushiSwap clearly show a steep decline.
4) Borrow and Supply Activity in Lending Protocols has Declined
The activity in DeFi lending protocols have also been affected significatively. This is clearly illustrated in the following IntoTheBlock’s activity indicators for Compound for users and borrow-supply activity.
5) DeFi Liquidations are Having a Field Day
The increase in volatility and liquidity declines has, like expected, triggered a large number of liquidations in DeFi protocols. A clear example can be seen in IntoTheBlock’s liquidation analysis for Compound.