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93% of crypto assets see red in September: Why?

Photo of: Joseph Stone
by Joseph Stone

Correction or return to normal for the DeFi tokens ? In September, 93% of the 250 main crypto-assets recorded a loss. In the field of decentralized finance, this decline is in the range of 15 to 85%.

Is this the end of the euphoria? In August, the DeFi market entered a phase of very strong activity. It was characterized by a sudden surge in the price of a certain number of tokens. And this increase did not necessarily result from the interest in DeFi protocols. There was certainly a lot of speculation around this booming market.

Over a one-month period, the trend is even more significant. In September, 93% of tokens showed a clear decline. And Messari’s indicators for DeFi protocols highlight that this decline particularly affects the latter.

The main tokens in this sector, with a few rare exceptions, are all declining over the course of a month. The fall is variable, however, and ranges from -15% to -85%. For Curve, for example, the 30-day dive is 78%.

Other popular DeFi protocols such as Balancer (-53%), Synthetix (-34%) and AAVE (-29%) certainly limit the damage in comparison, but do not escape this trend. However, should this be seen as a disavowal of decentralized finance?

Not necessarily, no. The success of Uniswap and its liquidity pools can bear witness to this. The amount of liquidity now exceeds 2 billion dollars in cryptocurrency. This success is largely due to the launch of a governance token, UNI, but not only.

The interest of these tokens and their real value as an instrument of decentralized governance, however, tends to show their limits. In the case of Uniswap, for example, only Binance holds enough UNIs to really influence this governance.

Nevertheless, and while tokens have declined significantly, the total cash deposited on DeFi protocols continues to grow. On September 30 at 8:00 am, it was just over $11 billion. On August 1, the figure was $4 billion.

More than the governance token quotation, it is probably the total value of crypto-assets deposited that is the main indicator of the adoption of DeFi and its growth.

For DeFiWorld, these corrections are moreover quite normal. They would not be foreign to those observed in 2016 either.

“We evolve in bubbles and 4-year cycles. While everyone is just thinking about what is happening today, this week or this month, you should zoom out and think about the direction we are really taking. The long-term trend is clear: it’s up,” he says.