Major decentralized finance (defi) projects fell sharply in October, with token prices tumbling by between 30% and 56%, as money appears to be moving away from the overhyped space and back into bitcoin.
According to Coingecko data, Andre Cronje’s Yearn Finance (YFI) fell fastest, crashing 56% to around $10,400 as of Nov. 1, down from $23,800 thirty days earlier.
Since Sept. 12, YFI total market capitalization has bled $957 million from a high of $1.27 billion. The asset, whose price peaked at over $43,000 two months ago, currently boasts $312.9 million in market value.
Uniswap (UNI), the popular decentralized exchange (dex) built on the Ethereum blockchain, lost 46% of its value to $2.34 from $4.43 on Oct. 1. Market capitalization fell similarly to $486.7 million.
Lending protocol Aave (AAVE) tanked 45% to $30 from $54.81 at the beginning of October. Compound (COMP) plummeted more than 30% to $94 from $137, as it tracked declines across the entire defi industry.
Several other tokens such as sythentix (SNX), UMA, maker (MKR), and loopring (LRC) all fell by between 9% and 35%.
Defi protocols are built around smart contracts. Through them, investors can move their assets across different protocols looking for the best possible return in a process that has become to be known as ‘yield farming’.
But as the total value of deposits locked in defi projects somewhat remained high – at $11.1 billion as at Nov. 2, according to Defi Pulse – trading volume on decentralized exchanges has nosedived, suggesting funds may be moving away from defi and back into bitcoin.
Weekly volume skid to just $3.1 billion in the last seven days, Dune Analytics data shows, down from $18.3 billion thirty days ago, as the defi hysteria cools off. At the same time, the price of bitcoin (BTC) has been gaining in value, soaring nearly 30% in October to a yearly high above $14,000.
And, apart from existing crypto money retracing back to BTC, new institutional money is pouring into the top digital asset. Multi-million-dollar investments into bitcoin by corporate outfits such as Microstrategy and Square appear to have added momentum to the emerging BTC bull market, with some analysts targeting a price of $20,000 by year-end.
Ilya Abugov, lead analyst at Dappradar, told industry media that despite the defi token bloodbath, “there is nothing that has damaged the story of defi and dex growth [fundamentally]. New projects are being developed.”
What do you think about the massive price correction in defi? Let us know in the comments section below.
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