DeFi Locked Value Falls to Yearly Low, $27B Lost Over the Weekend

The drop is likely due to falling token prices and risk-off sentiment in the broader market, analysts said.

May 9, 2022 at 11:24 a.m. UTC
Updated May 9, 2022 at 3:15 p.m. UTC

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

Value locked on decentralized finance (DeFi) protocol set 2022 lows this weekend amid a broader sell-off in global markets and waning interest in risky assets, such as cryptocurrencies.

Data from tracking service DeFi Llama shows DeFi protocols hold a collective $177.6 billion as on Monday, a 29% slump from December highs of $252 billion. Some $27 billion in locked value was lost over this weekend alone, the data shows.

Stablecoin swap platform Curve, the largest DeFi protocol by total value locked (TVL), saw a nearly 10% drop in the past week. Staking service Lido saw a 13% drop, while Terra’s Anchor took a 21% cut as the TerraUSD (UST) token temporarily lost its peg to the U.S. dollar over the weekend.

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TVL has dropped across the top 10 DeFi protocols. (DeFiLlama)

Some protocols have taken big hits in the past month. DeFi aggregator Instadapp saw a 43% drop in TVL, lending protocol Aave lost 22%, while cross-chain liquidity tool Stargate lost as much as 60% of its TVL.

A part of the drop can be attributed to the falling prices of the underlying tokens stored, some analysts explained.

“The decline in DeFi TVL we’re currently seeing is caused mainly by the overall market downtrend – on the one hand, a lot of assets locked in DeFi protocols are highly volatile and their value decreased with the market dip,” said Kate Kurbanova, co-founder of risk management platform Apostro, in a Telegram message.

“On the other hand, we should count on the fear which usually comes with the downtrend and people exiting their positions (volatile) into stablecoins or fiat – which also drives value away,” Kurbanova added.

The fall in TVL comes as April saw falling revenues on DeFi platforms compared to March. These revenues are earned each time a user trades, lends or conducts other activity with the protocol taking a small cut of volumes as fees.

Financial services platform SushiSwap saw a 29% drop in revenues, while those on DeFi exchange Balancer fell as much as 66%, as reported. Curve (CRV) and Uniswap (UNI) were the only DeFi projects to post revenue gains. Curve earned 51% more in April than it did in March, while Uniswap made 13% more.

Tokens of the broader DeFi sector lost 34% on average – becoming the worse-performing crypto sector. The memecoin sector, in comparison, lost just 16%, proving to be a better bet for investors who chose to punt on memes instead of sophisticated technologies.


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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

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