The expression of Bitcoin can be seen in the illustration photograph taken at La Maison du Bitcoin in Paris, France on June 23, 2017. REUTERS / Benoit Tessier
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June 21st (Reuters)-Cryptocurrency lending may not be down, but it’s certainly on the ropes.
Cryptocurrency lenders have grown exponentially over the last two years, raising tens of billions of dollars in Bitcoin, ether and other coins, lending and investing them. In many cases, we have invested in highly profitable decentralized finance (DeFi) projects.read more
But as the crypto market falls, DeFi activity has been hit particularly hard, stealing the most profitable returns from lenders and putting pressure on the entire sector-when it froze withdrawals and transfers last week. It goes far beyond the Celsius network that grabbed the headline.
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According to data provider Glassnode, Ethereum-locked total value (TVL) is an indicator that seeks to track the value of tokens deposited with various DeFi protocols, which is $ 124 billion, or 60%, in the last six weeks. It has decreased.
The crash occurred on two large cryptocurrency slices. $ 94 billion was lost during the collapse of the LUNA project, including the failure of Stablecoin TerraUSD, and another $ 30 billion was lost in mid-June.
“Current market conditions are putting a lot of pressure on operators that interact with decentralized financial protocols to generate yields,” said Mauricio Di Bartolomeo, co-founder and chief strategy officer of crypto lender Ledn. increase.
Bitcoin VS Ether VS Dollar
Similarly, DeFi lending / borrowing protocols from research firm Macrohive and exchange-linked index tracking crypto tokens plummeted 35% last week as investors withdrew funds from their previous high-flying sector.
Some DeFi protocols or projects are starting to lose profits as average lending and borrowing rates on one platform, Compound, are declining weekly on all but one cryptocurrency.
As a further sign of slowdown, Ethereum, the token that underpins the Ethereum network running many DeFi protocols, fell to its lowest level last week against the larger peer Bitcoin in the 14 months.
Bitcoin has fallen 34% against the dollar so far in June, while ether has fallen by more than 40%.
The turmoil in this high-yielding part of the crypto market raises questions about the sustainability of high interest rates offered by crypto lenders to their clients. Often two digits.
Is it too good to think of reality?
Some market players say cryptocurrency lenders should make their clients aware of the risks of the projects in which their money is invested.
“If the assets are managed in a DeFi space, we expect users to demand more transparency,” said Iakov Levin, CEO of crypto investment platform Midas Investments. “Cryptography needs to find a more transparent model of retail yield.”
Based in New Jersey, Celsius has more than $ 11 billion in assets on its platform and raised market volatility when it suspended redemptions last week. Data Troll shows that you have invested in some DeFi projects that have problems.read more
Yubo Ruan, Founder and CEO of Parallel Finance, said: Decentralized lending protocol.
Ruan said the project was “a reward for the promise that it was too good to be true-it could always be.”
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Reported by Medha Singh and Lisa Mattackal in Bangalore. Edited by Alun John and Pravin Char
Our Criteria: Thomson Reuters Trust Principles.
The expressed opinion is that of the author. These do not reflect the views of Reuters News, which under the principle of trust, is committed to integrity, independence and freedom from prejudice.
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