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DeFi Goes Down? TVL Drops in the Aftermath of Crypto Crash

Posted Monday, May 24, 2021 by
Aiswarya Gopan • 2 min read

It may have been one of the biggest reasons driving the surge in the crypto market over the past few months, but the world of DeFi has taken quite the beating following the market crash in cryptocurrencies last week. Analysis from Defi Llama reveals that the total value locked (TVL) across all DeFI platforms has collapsed from an ATH of over $164 billion touched on May 10 to just over $97 billion, at the time of writing.

The crash in the DeFi ecosystem’s TVL is a result of the reduction in the value of the tokens, in addition to the deposits the projects had in the form of leading cryptocurrencies, most notably BITCOIN and ETHEREUM. DeFi’s favorite platform Ethereum has seen the value of its tokens decline by over 37% over the past week alone, while BNB – the token which powers the Binance Smart Chain, has crashed by over 47% over the same period.

The pullback in the market has hit several new investors hard, most of whom entered the crypto space at the time of the bull run that began late last year. In addition to the recent crash, DeFi projects have also come under pressure over news of recent hacks, for instance, the Pancake Bunny incident and more recently, the exploit that took away $10 million from Rari Capital.

However, not all hope is lost – not just yet at least. A recent report – the Global Crypto Hedge Fund Report – published by PwC reveals the growing appetite for DeFi among crypto hedge funds. In addition, the firm’s Crypto Leader, Henri Arslanian, observes, “Whilst they may be still far from using decentralized applications, many financial institutions are trying to be more educated and try to understand the potential impact that DeFi may have on the future of financial services.”

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