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DeFi exchange activity declines by 15% monthly as UNI and CRV prices fall, according to VanEck.
The decentralized finance (DeFi) sector encountered a difficult month in August, with exchange volume decreasing by 15.5% to reach $52.8 billion, primarily driven by a downturn in several leading DeFi tokens, as reported by investment manager VanEck.
VanEck’s analysis also addressed global interest rates, particularly in the U.S., and their impact on stablecoins. The total market capitalization of stablecoins experienced a 2% decline in August, concluding the month at $119.5 billion.
The firm links this decrease to the rising interest rates in traditional finance, which have led investors to shift from stablecoins to money market funds, attracted by an estimated 5% risk-free yield.
DeFi decline
The data in the report was derived from VanEck’s MarketVector Decentralized Finance Leaders Index (MVDFLE), an index that tracks the performance of the most significant and liquid tokens within the DeFi space.
Several major tokens, such as Uniswap’s UNI, Lido DAO‘s LDO, Maker’s MKR, Aave’s AAVE, THORChain’s RUNE, and Curve DAO’s CRV, saw substantial declines, impacting the overall market health.
The DeFi index underperformed compared to major digital currencies, Bitcoin and Ether, in August, experiencing a considerable drop of 21%. This downturn was exacerbated by the Uniswap token, which fell by 33.5%, as numerous investors chose to sell their tokens to capitalize on gains from the previous month.
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On a larger scale, the total value locked (TVL) in the DeFi sector decreased by 8%, dropping from $40.8 billion to $37.5 billion — slightly better than Ethereum’s 10% decline during the same timeframe.
Conversely, several positive signs emerged in August, including the successful dismissal of a class-action lawsuit against Uniswap Labs and the notable growth of stablecoins, particularly with Maker and Curve.
Curve Finance
Curve Finance, which had been dealing with the repercussions of a significant exploit in July, saw its stablecoin crvUSD reach a record high with $114 million borrowed in August. Despite this encouraging trend, Curve Finance’s governance token CRV did not exhibit a substantial recovery following the exploit, losing 24% of its value in August to finish at $0.45 at the month’s end.
A key point in the VanEck report focused on the performance of the CRV token. The document raised concerns regarding the declining value of the CRV token, suggesting that potential recovery may only occur if the growth of crvUSD offsets the decrease in DeFi volume.
Further adding to market apprehensions was Curve Finance founder Michael Egorov’s considerable debt, primarily secured by the CRV token. Following a nearly 30% drop in the CRV token value after the hack, fears regarding a possible liquidation of Egorov’s collateralized loan sparked concerns about a ripple effect in the DeFi sector.
To alleviate this debt, Egorov sold 39.25 million CRV tokens to a consortium of prominent DeFi investors.
The post DeFi exchange volume down 15% on a monthly basis amid UNI, CRV price crash – VanEck appeared first on CryptoSlate.
