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Borrowing demand in decentralized financing protocols (DEFI) has strongly plunged into the wake of the recent torment of the cryptography market, a sign of generalized deterioration while cryptographic investors were taking place.
The average yield of closing the US dollar – what the protocols pay to lenders for lending their assets – fell on Tuesday at 2.8% at its lowest level in one year, measured by DEFI rendering app application vaults.fyi’s benchmark. It is below the average market rates in US dollars on traditional markets (4.3%), and a heavy drop in the crypto market in mid-December, when challenge rates exceeded 18%.
“This is largely due to the market which evolves towards a risk environment where borrowing through protocols has decreased considerably,” said Ryan Rodenbaugh, CEO of Wallfacer Labs, the team behind Vaults.Fyi.
This decision reflects the feeling of risk is spreading in cryptographic markets, investors withdrawing the lever effect in the midst of birds of volatile prices. While users reimburse that loans and liquidations eliminate sub-collateralized positions, request for loans. Meanwhile, the deposits available for loans on protocols remained stable, by chests.
It is a “negative double blow” for the prices that remaining lenders are paid, said Rodenbaugh.
The sharp drop in yields and deleveraging was exacerbated by the carnage of this weekend on the cryptographic markets, as the main DEFI loan protocols reported a wave of liquidation in the midst of the prices of the active ingredients quickly. Bitcoin (BTC) and ETH Ethereum, two assets mainly used as a guarantee for cryptographic loans, underwent a drop of 10% to 15% less than $ 75,000 and $ 1,500, respectively.
Aave, the largest decentralized loans market by total locked value (TVL), has treated more than $ 110 million in forced liquidations during the decrease in the market on Sunday-moi, Omer Goldberg, CEO of the Société de Defi Analytics Chaos Labs, noted data on chain data.
Sky (formerly Makerdao), a transmitter of the USDS dollars Stablecoin and one of the largest DEFI loan platforms, also liquidated that the $ 74 million dollars of $ 74 million of 67,570 ETH, worth 106 million dollars at the time, show data from the channel. Another large lender with 65,000 ETH in warranty rushed to repay parts of their loan of $ 66 million to avoid a similar spell, which lowered the debt in progress to $ 28 million.
The total value of the assets borrowed from Aave fell to $ 10 billion on Tuesday, a clear drop of more than $ 15 billion in mid-December, according to Defillama data. Morpho, another key loan protocol, had a drop similar to $ 1.7 billion, compared to $ 2.4 billion during the same period, by Defilma.