The DeFi industry suffered heavy losses.
DeFi’s locked total value (TVL) has dropped 40% in one week.
The reason for the drop is due to the fact that investors are converting tokens into stablecoins as they prepare to convert them to fiat money.
The drop in token prices also affected TLV.
It was reporting a nominal TVL of $83.4 billion since the start of the year, down 48%.
Terra Fallout Spooks Investors
The collapse of Terra and Luna caused a shock wave on the DeFi ecosystem.
Amid major concerns for Terra, UST and LUNA, traders seem to be getting scared and removing large amounts of stablecoins from protocols.
The fall of the stablecoin also affected DeFi lending of the UST fiasco as it raised concerns from investors and regulators about the viability of such assets.
Circle’s USDC was unscathed this week. It even traded above its fixed price for a short period of time.
USDC trading volume has exploded over the past few days, reaching almost $25 billion on May 13.
The future of stablecoins is in doubt, but it is worth remembering that most stablecoin assets are backed by more tangible support, unlike UST, which is backed by crypto assets.
DeFi Tokens Tank
DeFi-related tokens have gained a total of 47% in one week. The total market cap for all DeFi coins is close to $100 billion.
Tokens for major lending protocols have dropped drastically over the past week. AAVE is down 38% this week, KAVA is down 45% and COMP is down more than 32% in the past seven days. Also, Chainlink’s LINK and Uniswap’s UNI lost 34%.