As global markets fell and interest in risky assets, such as cryptocurrencies, dwindled this past weekend, so too did the value of the decentralized finance (DeFi) system.
According to tracking firm DeFi Llama, the total value of DeFi protocols was $177.6 billion on Monday, down 29 percent from December’s high of $252 billion. According to the data, around $27 billion in locked value was lost just over the weekend.
Almost 10% of Curve’s total value locked (TVL) has been lost in the last week, making it one of the largest DeFi protocols. As the TerraUSD (UST) token temporarily lost its peg to the US dollar over the weekend, staking services Lido and Anchor saw their prices fall by 13% and 21%, respectively.
In the last month, a number of protocols have suffered significant setbacks. There were significant drops in TVL for Instadapp (43 percent), AAVE (22 percent), and Stargate (up to 60 percent) throughout this period.
Some researchers believe that the decline in the value of the underlying tokens stored is partly to blame.
Kate Kurbanova, co-founder of risk management platform Apostro, said in a Telegram message that “the decline in DeFi TVL we’re currently seeing is caused primarily by the overall market downtrend.” Kate Kurbanova: “A lot of assets locked in DeFi protocols are highly volatile and their value decreased with the market dip.”
Aside from the worry of a market downturn and people fleeing their assets (volatile) into stablecoins or fiat – which also takes away the value of the cryptocurrency, Kurbanova said.
The decline in TVL is due to a drop in DeFi platform revenues in April versus March. To generate these funds, the protocol takes a modest percentage of the number of transactions that are made by users.
Both SushiSwap and Balancer, a DeFi exchange, saw sales fall by as much as 66 percent, according to reports. Two DeFi ventures, Curve (CRV) and Uniswap (UNI), posted revenue gains. While Uniswap recorded a 13 percent increase, Curve earned 51% more in April than in March.
The DeFi sector as a whole lost 34% on average, making it the worst-performing cryptocurrency sector. The memecoin sector, on the other hand, lost just 16 percent, proving to be a better choice for investors who chose to place their bets on memes rather than cutting-edge technology.