The DeFi sector showed resilience during the May 19 crash and extreme gas prices. This manifested in high activity on the DEX, robustness of liquidation and arbitrage mechanisms, and the pegging of stablecoins, according to Glassnode analysts.
The #DeFi ecosystem was put to the test last week, as collateral value fell, gas prices spiked and demand for stablecoins increased.
In this piece we analyse the resilience of #DeFi protocols, and the response of the market to a rapid 50% price mark-down.https://t.co/npJAymSo62
— glassnode (@glassnode) May 26, 2021
Prices of major DeFi tokens during this period showed a higher beta relative to Ethereum. Nevertheless, during the buyers’ capitulation, this deviation in relative terms did not exceed 15%.
The largest declines were in YFI (72%). During the subsequent rebound, price declines from the all-time high in the sample narrowed to 42-56%.
Relative to Bitcoin, Ethereum showed resilience, unlike previous episodes of sharp corrections.
Total value locked (TVL) in DeFi protocols fell by 42% from peak to trough, while Ethereum price fell by 52%.
Share of ETH locked in protocols remained near 23%, while the share on exchange balances rose from 11.13% to 11.75%.
On May 19, trading volume on decentralized exchanges reached a record $11.7 billion, of which $5.7 billion was on Uniswap, $2.8 billion on SushiSwap.
Major stablecoins maintained stable pegs throughout the period.
The USDT/USD rate ranged from about $0.99 to $1.02, with deviations lasting from seconds to minutes. DAI did not face issues seen in March 2020.
On May 19, on-chain value transferred in stablecoins reached a record $52 billion.
Analysts at Glassnode concluded that the latest drop caused panicky selling by short-term investors, while long-term buyers bought the dip.
Earlier ForkLog reported record trading volumes on DEX for May so far.
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