The end of the month was not favorable for leading DeFi tokens. On Friday, October 30, the price of yEarn Finance (YFI) fell below $10,000, with new lows set by Uniswap (UNI), Compound (COMP) and other assets in the DeFi space.
Following September’s growth, YFI rose to $43,000 before a correction — the asset briefly dropped below $9,900. At the time of writing, the token was trading around $11,000.
Over 30 days, YFI fell by 55.5%, over the week by 18.2%, and in the last 24 hours by 3.7%.
Analyst Cantering Clark said that YFI has become a leading indicator for the entire DeFi sector.
$YFI IMO is the confidence index and forward indicator for Defi.
Yields across the board are going to dry up more, and yet still new traders are jumping into pairs now not realizing how many got in a poor position higher and are begging for a relief rally to sell. pic.twitter.com/NmkqjTjAKe
— Cantering Clark (@CanteringClark) October 30, 2020
“Returns across the entire sector will continue to decline. Yet new traders are still jumping into trading pairs, not realizing how many others entered positions at higher prices,” he wrote.
At the time of writing, the market capitalization of DeFi tokens stood at $14.6 billion. In the red zone are assets from the top ten, with the exception of WBTC and Aave.
The volume of assets locked in DeFi protocols over four days fell from $12.41 billion to $10.94 billion.
Analysts at ConsenSys dubbed the growing popularity of the DeFi sector a threat to staking in Ethereum 2.0. In their view, developers will begin offering liquidity tokens with a value equivalent to ETH that is locked up.
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