DeFi Market Also Takes a Direct Hit from Coin Price Drop... Deposit Volume Plummets

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] As the cryptocurrency market enters a downturn, the scale of DeFi (Decentralized Finance) deposits has also sharply declined. DeFi stands for Decentralized Finance, referring to financial services implemented on blockchain networks without going through traditional financial institutions such as banks, securities firms, or insurance companies.

According to DeFi analytics platform DeFiLlama on the 20th, the total DeFi deposits as of the previous day were $85.38 billion (approximately 111.5063 trillion KRW). This represents a 6.84% increase compared to $79.91 billion on the 18th. However, compared to the peak deposit amount of $253.91 billion (approximately 331.6065 trillion KRW) recorded on December 2 of last year, when the representative cryptocurrency Bitcoin price was more than $33,000 higher than now, it has sharply decreased by about 66%.

The scale of DeFi deposits showed a declining trend as cryptocurrency prices fell due to the Luna Classic incident and concerns over an economic recession. Until May 5, before the Luna Classic incident occurred, the deposit scale was identified as $205.62 billion, but after the incident, on May 13 of the same month, it decreased to $111.86 billion. Earlier, when the price of TerraUSD (UST), a stablecoin designed to be pegged to 1 dollar, plummeted, the price of its sister coin Luna Classic also crashed. Terraform Labs, which issued Luna Classic and UST, had raised concerns over the high interest rates of the DeFi service Anchor Protocol that utilized UST.

Furthermore, as cryptocurrency prices fell due to the U.S. Federal Reserve's interest rate hikes and recession concerns, the deposit scale decreased again starting from the 10th of last month. On the 19th of last month, it recorded $70.18 billion, the lowest level since March 2021.

Meanwhile, the ranking of DeFi project deposits was MakerDAO, Lido, Aave, and Uniswap in order. MakerDAO, which recorded the highest rank, had a deposit scale of $8.54 billion, while Lido, Aave, and Uniswap were recorded at $6.75 billion, $6.23 billion, and $5.91 billion, respectively.

This content was produced with the assistance of AI translation services.