DeFi May Summary: NFT Fragmentation Bucking the Trend

Various assets are still entering the DeFi space, there are more and more BTC anchored coins on Ether, and stablecoin offerings are all growing.

After more than a year of a bull market, the entire cryptocurrency market has seen a correction and various figures in DeFi have been affected by falling prices. Thankfully, most DeFi protocols have weathered extreme markets like 5.19 without exposing investors to additional losses. There are also some older programs that have quickly taken over the market with new formats after the upgrade.

Project launch and updates

Uniswap V3 finally went live on the Ether mainnet with all expectations. This time, the added features include granularity control for aggregated liquidity, range orders, multi-level rates, advanced prophecy machines, and more. Because liquidity providers (LPs) are allowed to define their own liquidity intervals and choose their own fee ratios, LP Tokens are also designed as NFTs, and users who provide liquidity early on have a higher possibility of obtaining rare NFTs. according to official data, Uniswap V3 has surpassed Uniswap V2 in terms of daily volume, making it the largest volume decentralized exchange. Because of the customizable liquidity band, users can choose to reduce the liquidity band in Uniswap V3 in order to get higher fees, but this also leads to excessive NFT losses, from which professional centralized market makers and decentralized active market making programs may benefit more in the future, an area where Lixir Finance, Charm Alpha Vault, Visor, Method Finance and other projects in this field.

Gitcoin, a decentralized collaboration platform built on Ether, also issued its governance token GTC in May, and Gitcoin will manage grants, disputes and finances in the form of a DAO. Vitalik, the founder of Ether, had also donated $431 million worth of AKITA tokens in his account to Gitcoin. according to the claiming interface on the official website, the number of GTC airdrops a user receives depends on three components: activity, core, and total transactions. Previously, Gitcoin has conducted nine donation programs, but if the airdrop is the purpose, only the ninth donation has been participated in, and may not be able to rely on the airdrop reward to recover the cost of investment.

Unicly, the NFT fragmentation trading protocol, has launched liquidity mining since May 18. Users can lock a set of NFTs into a smart contract to create easily tradable uTokens, a combination of NFT and DeFi. Each uToken is created with a preset percentage of uTokens required to unlock the corresponding NFT, and uToken holders can vote on whether to unlock it. According to中的数据, Unicly has accumulated close to $60 million in liquidity so far. Looking at the trend of liquidity, it has also been growing, and even in the extreme market of 5.19, the liquidity has not decreased a lot, and it is one of the few projects that have not been affected by the market.

DeFi May Summary: NFT Fragmentation Bucking the Trend

Aggregate revenue protocols have attracted over $6 billion in funding, with Yearn returning to dominance with over 40% of the market size. yAxis, an aggregated revenue project developed by an anonymous team, also attracted $200 million in funding in May after completing its token conversion in April. yAxis’ Metavault 2.0 offers a simple UX that guides users through all the steps in a single interface like a flowchart, starting with pledging stablecoins and ending with pledging MVLT tokens until they are rewarded. The current first machine gun pool strategy is designed around depositing stablecoins into Curve for transaction fees and CRV governance token gains.

Total lock-in volume

According to DeBank’s statistics, in May, total locked-in positions in five networks – Ethereum, BSC, xDai, Polygon, and Fantom – fell 24.1% from $105.7 billion to $80.2 billion, while net locked-in positions fell 22.1% from $75.9 billion to $59.1 billion. Ether’s price also fell to $2,271 last month after rising from $2,772 to $4,300, down 18.1% for the entire month. Other platform coins, BNB fell 43.25% and MATIC rose 128%. Major DeFi tokens, UNI fell 30.49%, LINK fell 15.75%, and AAVE fell 14%.

Looking at the overall picture, the decline in lock volume was between the smaller declines in AAVE and LINK, and the larger declines in assets such as BNB and UNI, so the decline in lock volume may simply be due to lower market prices.

Collateralized borrowing

Collateralized lending would theoretically be affected by market conditions to a greater extent, and in a crash, there could be many users facing liquidation of their assets. However, in real terms, total borrowing volume on the major lending platforms also fell only 14.8% from $19.6 billion to $16.7 billion.

The liquidation volume on May 19 also set an all-time record, with $610 million liquidated in a single day. Among them, Venus, a lending platform on BSC, set a DeFi single-day liquidation high of $250 million, with 40.79% of the volume cleared. Among the other major mortgage lending platforms, Aave V2 cleared $157 million, Compound cleared $130 million and Maker cleared $42 million.

There has also been a resurgence of platforms following the end of the correction. at the end of May, Aave V2’s total borrowing volume reached $5.4 billion, surpassing Compound as the largest decentralized lending platform. A month ago, Aave V2’s total borrowing volume was only $3.6 billion, and Aave V1 was only $400 million.

Venus, on the other hand, was one of the most affected. The day before 5.19, Venus price rose from near $80 to $144, then fell to $31 on May 19, and a large number of platform coins XVS lent BTC, ETH and other assets after pledging at high levels, leading to a liquidation of up to $250 million occurred. In May, Venus’ borrowing volume fell from $4.12 billion to $1.28 billion.

Decentralized Exchanges

Trading volumes on decentralized exchanges were higher during the dramatic price swings around 5.19, and then volumes returned to normal. While Mdex is in first place in DeBank’s statistics in terms of trading volume, this is mainly influenced by the incentive from trading mining.

According to official data from Uniswap V3, trading volume amounted to around $1 billion per day at the end of May, surpassing all decentralized exchanges except Mdex.

Stable Coins

According to Coin Metrics, the total market cap of the five commonly used stablecoins – USDT, USDC, BUSD, DAI, and PAX – surpassed $100 billion at the end of May, reaching $100.6 billion, compared to $79.6 billion a month earlier, up 26.4% in a month. After the decline, people need stablecoins for bottoming and the price of OTC has risen.

The statistics show that the circulation of all stablecoins is growing. Even for DAI, which is generated by overcollateralization, the circulation volume did not decrease due to the falling price of ETH. Notably, USDC’s market cap in circulation grew from $14 billion to $22 billion. Circle, the issuer of USDC, has raised $440 million and may go public through a special purpose acquisition company (SPAC), according to The Block.

DeFi May Summary: NFT Fragmentation Bucking the Trend

BTC Anchor Coins

Bitcoin anchor coin issuance also continued to grow, with Bitcoin issuance on Ether increasing from 216,700 to 242,900, a 12% increase. However, most of the growth came from WBTC, which increased by 23,000, while HBTC and renBTC, both in second and third place in terms of issuance, decreased.

Prophecy Machine

At the end of May, the number of calls per day for the Prophecy Machine was close to the number before the end of April. The number of calls to the prophecy machine, like the trading volume, was higher when the market price was more volatile. However, from the historical data, the number of calls to the Prophecy Machine did not exceed that of December 18 last year when the market fluctuated on 5.19. The market did not have big fluctuations in December last year, so it may be that the call to Chinlink was higher only because of a chance situation. Excluding this particular case, the number of calls to the prophecy machine on 5.19 exceeded the other times because of the market riot.

Summing up

Although data such as lock volume and lending volume in DeFi has decreased because of the market decline, you can see that various assets are still entering the DeFi space, such as more BTC-anchored coins on Ether, various stablecoin offerings are growing, and Circle may be seeking to go public. The market is also giving recognition to the best projects, with Aave V2 rising to number one in terms of borrowing volume and Uniswap V3 rising to the top of the list in less than a month’s time.

Posted by:CoinYuppie,Reprinted with attribution to:
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