According to an analysis by the investment manager VanEckthe volumes of trading and volatility in the digital assets They reached 2-year lows. This confirms that August was a bad month for the ecosystem of the decentralized finance (DeFi).
Specifically, in the eighth month of the year, up to 52.8 billion dollars were negotiated, 15.5% less than in July. According to the manager, this decrease is due to the fact that investor interest decreased due to the seasonality and to attractiveness of the 10-year US Treasury bondwhose performance reached its highest level in 15 years.
“Venture capital funds deployed in blockchain projects totaled just $500 million in August 2023, compared to $1.9 billion in August 2022 and $2.7 billion in August 2021, respectively, while listed products (ETPs, for its acronym in English) about cryptocurrencies recorded large refunds,” they explain.
DeFI: the worst drop for Bitcoin and Ethereum
The results are based on the MarketVector Decentralized Finance Leaders Index (MVDFLE) from VanEck, which tracks the performance of the largest and most liquid tokens of DeFi protocols such as Uniswap (UNI), Lido DAO (LDO) or Maker (MKR), among others. This stock performed worse than bitcoin (BTC) and ethereum (ETH), which fell 9 and 10%, respectively, at go back 21% in the last month. In comparison, the Nasdaq Composite fell 2% in August.
On the other hand, total value locked (TVL) in DeFi fell 8% in August, from US$40,800 to US$37,500 millionslightly outperforming ethereum’s 10% pullback.
DeFI: what are the positive signs
Although DeFi tokens had a poor performance in Augustthe ecosystem witnessed positive events Throughout the month, analysis argues such as the dismissal of a class action lawsuit by Uniswap Labs and the growth of stablecoin by Maker and Curve.
“The growth of crvUSD has allowed it to become a major revenue contributor to the platform, with crvUSD rates exceeding the rates collected from all non-mainnet liquidity pools in 3 of the last 4 weeks,” they indicate. In contrast, the crvUSD token Curve’s government “has seen no promising signs of recovery, with its price falling 24% in August to $0.45.”
“If crvUSD can continue to grow to the point of offsetting the decline in exchange income caused by declining DeFi volume, CRV price may see some relief. However, until then, the decline in DeFi volume remains a solid headwind for CRV appreciation,” they add.
DeFI: how the rise of the dollar and rates affects the market
Likewise, VanEck noted that current levels of world exchange ratesparticularly in the United States, continue to put pressure on the stablecoins. According to the manager’s data, the aggregate market capitalization of stablecoins fell 2% in August, to $119.5 billion.
“This is mainly the result of the high interest rates in traditional finance, which has incentivized investors to dump their stablecoins and move into money market funds where they can receive close to 5% risk-free returns,” they said.
Source: Ambito
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