The total locked value has shrunk by more than 10%. Has the DeFi turning point arrived?

Over the past week, the DeFi space has felt the chill of late autumn.

According to the data from the crypto data website DeFiPulse, the total locked value in the DeFi field has decreased from $12.46 billion to $11.02 billion in the past week, a decrease of more than 10%. In contrast, Bitcoin, the cryptocurrency with the highest market value, is hot. According to Bitpush data, the price of Bitcoin has exceeded $13,500, and is only one step away from breaking the recent high created in the middle of last year.

In fact, after September, the heat in the DeFi field has begun to cool down. As the concept of liquidity mining becomes outdated, funds begin to flow out, and the flash loan attack on Harvest Finance this week is a heavy blow to DeFi.

In addition to causing huge economic losses, this attack has shaken the confidence of investors and developers in DeFi. Such attacks have occurred many times before. According to Bitpush, at the beginning of this year, two hackers used flash loans to attack the margin trading protocol bZx, and the arbitrage amount reached 1 million US dollars; then in June this year, the Balancer liquidity pool was attacked by flash loans again, with a loss of 500,000 US dollars.

After the attack, the total locked value of Harvest Finance shrank by 50% in one day. According to DeFiPulse data, its total locked value has now been reduced to US$310 million, which is more than 70% less than the US$1.09 billion before the attack.

In terms of DEX, the data over the past period is also not optimistic. According to the data from the on-chain analysis platform Dune Analytics, the weekly trading volume of DEX last week was US$7.7 billion, and the daily trading volume fell by 28% compared with the beginning of the month. The trading volume of major DEXs is less than 50% of the peak. The reduction in DEX trading volume indicates that the popularity of DeFi is fading, the growing trading volume of Bitcoin derivatives, and the recent entry of large institutions indicate that bulls are taking effect, and investors are shifting their focus to Bitcoin.

Affected by capital outflows, the prices of major DeFi tokens have all fallen by double digits this week, with Uniswap (UNI), Yearn.Finance (YFI), Ren (REN) and Loopring (LRC) all falling by more than 20%.

In addition, DeFi's governance model is also being questioned. A report jointly released by DappRadar and Monday Capital shows that although DeFi projects are working hard to decentralize their control, many projects (especially those with strong sources of venture capital) are still highly centralized.

The researchers analyzed projects such as MakerDAO (MKR), Curve (CRV), Compound (COMP), and Uniswap (UNI). All of them showed a clearly uneven token distribution, which clearly favored large token holders.

Taking Compound as an example, researchers pointed out that users holding a large number of COMP tokens mainly include venture capitalists, team members and some other blockchain projects, especially Dharma and Gauntlet. Only 2.3% of addresses can propose and vote, so only a small part of the community participates in governance. Considering the existence of some exchange addresses, the actual percentage may be lower. The total supply of COMP tokens is also heavily tilted towards the top 20 addresses.

Various signs indicate that the current focus of the crypto market is moving away from the DeFi field. Wang Qiao, partner of DeFi Alliance, told Bitpush that the current decline of DeFI has not yet reached the bottom, but "DeFi and ICO are completely different" because "DeFi is really innovative."

Regarding the future development of DeFi, Wang Qiao said, "In the short term, the most direct application is DEX, which may seize the market share of centralized exchanges. Now the technology is more mature, especially in the second-layer expansion, so decentralized exchanges for derivatives may appear next year."

Regarding whether DeFi is a bubble, he told Bitpush, "In fact, the real Silicon Valley is about blowing bubbles. What they are best at is blowing bubbles for 10 to 20 years. The key issue is that after the bubble is blown, if there is real technology that can be applied, the bubble will not burst and will become real. It is good for this bubble. Blowing bubbles can attract more money and more entrepreneurs. The Internet bubble was very big back then, but the few that remained in the end also changed our humanity and society."

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AuthorLiang Che

This article comes from Bitpush.News. Reprinting must indicate the source.