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Analyst says DeFi and stablecoins held up well as crypto markets imploded

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DeFi is one of the most promising and truly fastest growing ecosystems in the crypto and blockchain space. The DeFi sector has shown resilience during the May 19 crash and gas price extremes. This was manifested in the high activity on the DEX, the stability of the liquidation and arbitrage mechanisms, as well as the pegging of stablecoins, analysts at Glassnode are convinced.

The prices of major DeFi tokens during this period showed a large beta compared to Ethereum. Nevertheless, during the period of surrender of buyers, this deviation in relative terms did not exceed 15%.

The largest decline fell on YFI (72%). In the course of the subsequent rebound, the decline in prices from the all-time high in the sample decreased to 42-56%.

With regard to Bitcoin, Ethereum has shown resilience in contrast to previous episodes of sharp corrections.

DeFi Total Locked Funds (TVL) fell 42% from highest to lowest, while Ethereum’s price fell 52%.

The share of blocked ETH in protocols remained stable near 23%, while the share of coins on exchange balances increased from 11.13% to 11.75%.

Despite the fall in prices, new users continue to enter the DeFi ecosystem.

On May 19, trading volume on decentralized exchanges reached a record $ 11.7 billion, of which $ 5.7 billion came from Uniswap and $ 2.8 billion from SushiSwap.

Major coins hold their positions

Major stablecoins have maintained a stable peg throughout the entire reviewed period.

USDT / USD rate fluctuated in the range of $ 0.99-1.02, while deviations lasted from several seconds to several minutes. DAI did not have the problems typical of the events of March 2020.

On May 19, the volume of transferred on-chain value in stablecoins reached a record $ 52 billion.

Capitalization of stablecoins crossed the $ 100 billion mark

On January 1, less than $ 30 billion of stablecoins were in circulation on the crypto market. According to The Block, this number has tripled since the beginning of the year and has now reached $ 100 billion. That is, their supply has increased sharply in 2021.

Tether (USDT) still accounts for over 60% of the total stablecoin market capitalization. USDT supply on Tron also grew exponentially and surpassed Ethereum supply.

Another stablecoin, USDC, is also starting to increase emission. Big partnerships with companies like Visa have accelerated USDC’s growth. Settlement in USDC on the Ethereum blockchain using Visa cards is an important step towards the global adoption of stablecoins.

As far as Tether is concerned, the biggest driving force was the introduction of the Tron blockchain, which made transactions faster and offered lower fees. Since the launch of USDT on Tron, the supply has grown exponentially and surpassed the supply on Ethereum a few weeks ago.

USDC worth $ 20 billion presented in the form of an ERC-20 token on Ethereum, which is the overwhelming majority of the total supply. Approximately $ 750 million in USDC traded on Solana.

This rapid growth can be attributed to two factors. First, stablecoins have become more commonly used in DeFi, where users can issue or borrow them.

In addition, stablecoins provide traders with a simple exchange environment allowing them to enter and exit their positions without actually withdrawing funds or reverting to fiat currency. Traders do not need to wait between trades, and they can reduce the risk of price fluctuations by maintaining profits in assets pegged to the dollar or any other fiat currency.