After sliding from a peak of over $2.6 trillion a few weeks ago, the global cryptocurrency market capitalization was still down by $1.7 trillion.
Some unfavorable storylines led to the market’s downfall, including an ecologically harmful mining technique. While Bitcoin (BTC) lost a substantial portion of its value, a recent Glassnode analysis examines how the Ethereum-based DeFi ecosystem reacted to the downturn.
With positive trading volume, DeFi has maintained its resiliency.
Despite the severe volatility, the Ethereum-backed DeFi ecosystem showed resiliency in terms of on-chain transactions. The research stated that the liquidation and arbitrage mechanisms functioned as planned, ensuring stability while stablecoins maintained their peg, with tremendous volume and utilization across the ecosystem.
Most tokens, including UNI, MKR, AAVE, COMP, SUSHI, and SNX, exhibited an unfavorable correlation with Ethereum as values plummeted. Compared to Ethereum, which fell 51 percent, the Total Value Locked (TVL) fell by around 42 percent.
Stablecoins like the USDT and DAI kept their pegs through the current market downturn, with volume-weighted average prices (VWAP) mostly maintaining at $1.00. The USDT/USD pair, on the other hand, fluctuated between a high of $1.02 and a low of $0.99. Stablecoins must be steady for the market to be balanced in general. A very fluctuating stablecoin is detrimental for critical DeFi businesses like lending, where stablecoins are used to decide collateral and rates.
Even though Ethereum is the backbone of the DeFi ecosystem, it has proven unable to protect the assets that operate on it from falling in value. According to the research, a more prolonged DeFi bear phase may be necessary to confirm the crash’s persistent trading activity. According to DeFi Pulse, the TVL of Ethereum-backed DeFi is currently $63.96 billion.