DeFi showed tremendous strength during last week’s sell-off as DEX activity and stability in stablecoins suggest the sector may be ready for mass adoption.

The DeFi sector faced its first real challenge during last week’s market sell-off, which wiped the global crypto market cap by more than $ 1 trillion as feverish traders battled for the safety of stablecoins amid falling prices.

Despite the rapid decline in token prices, the burgeoning DeFi sector held up as DEXs hit a record trading volume of $ 11.7 billion on May 19. Uniswap (UNI) led the way with $ 5.7 billion, followed by SushiSwap (SUSHI) with $ 2.8 billion in 24-hour trading volume.

Daily trading volume on DEX | Source: Dune Analytics

According to Glassnode’s recent DeFi Uncovered report, blue-chip DeFi tokens such as UNI, SUSHI, Maker (MKR), Aave (AAVE), and Compound (COMP) have largely reflected the decline in Ether (ETH) over the past two weeks . Show beta level

relatively high for ETH, but does not exceed more than 15% decrease in ATH compared to decrease in ETH.

In finance, beta is a measure of how an individual asset moves when the stock market as a whole rises or falls.

The price drop combined with the removal of liquidity by users and conversion to stablecoins has resulted in a 42% decrease in Total Locked Value (TLV) on smart contracts, which is also closely tracking the decrease in Ether price. Analyst says DeFi and stablecoins are holding on to the crash of the crypto market Total value locked in the smart contract compared to the ETH price

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Source: Glassnode

In essence, TVL is tied to the underlying value of the tokens on deposit, and since Ether is one of the main tokens locked on DeFi platforms, the decline in TVL has little to do with user withdrawals and owners.

Despite the drop in prices, new users continue to join the DeFi ecosystem, and the total number of unique 30-day traders on the top DEXs topped the 1 million mark for the first time in last week’s sell-off. Analyst says DeFi and stablecoins are holding on to the crash of the crypto market The only traders on DEX

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Source: Glassnode

Uniswap has a clear lead with 815,000 unique users from April 24th to May 23rd, while 1Inch (1INCH) is in second place with 78,200 users and SUSHI is in third place with 10,900 users.

Much of DeFi’s strength during the sell-off is due to the healthy stablecoin market and the ability of large stablecoins such as USD Coin (USDC), Tether (USDT) and Dai (DAI) to hold the dollar. her “for most of the crash, with the Volume Weighted Average Price (VWAP) staying at $ 1 for most of the time.” Analyst says DeFi and stablecoins are holding on to the crash of the crypto market DAI price vs. USDT price vs. USDC price

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Source: Glassnode

According to Glassnode, DAI’s performance is seen as “particularly positive for DeFi” as the circulating supply can adapt accordingly to meet the requirements for protocol stability and security.

The report also highlights that the collateral has been repossessed and that DAI was withdrawn from the offer due to claims made by the collateral holders.

Posey says:

“This behavior enables collateral to stay healthy, liquidity to stay healthy and DAI to stay on course.”

One stablecoin that has struggled to maintain its price is TerraUSD (UST), which lost its price on May 18 when its collateral value of LUNA fell below the value of the stablecoin it was collateralized. This resulted in “unfair behavior in the anchor credit market (ANC),” which resulted in an above-average number of liquidations on the protocol’s native credit platform.

Overall, stablecoins performed their intended function and remained stable across the ecosystem, with the volume of on-chain stablecoins hitting a record $ 52 billion during the height of the sell-off.

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