BTC and ETH prices fell to half of their yearly highs last night, causing liquidation volumes on the DeFi lending platform to skyrocket by about 337.40%, and its cascading effect also caused borrowing demand to plummet by 20.30%.
PAData, May 20 (Bloomberg) – The crypto market took a nosedive yesterday evening. According to CoinMarketCap, as of 14:45 today, Bitcoin was quoted at $39,857.33, a 24-hour gain of 0.55% and a 7-day loss of 21.83%. Its lowest dip in 24 hours was $32,061.55; Ether is quoted at $2,661.33, down about 10.53% in 24 hours and down about 33.25% in 7 days. Its lowest price in 24 hours once fell to $2038.92. Both are close to being cut from their yearly highs.
The market plunge led to a sharp rise in liquidation volume on DeFi’s lending platform. According to DeBank data, the total liquidation volume of all DeFi’s lending platforms yesterday was about $573 million, a jump of about 337.40% from the previous day. The three platforms with the largest liquidation volumes were Venus, Aave V2 and Compound, whose liquidation volumes accounted for 43.73%, 27.37% and 22.73% respectively. Among them, the large liquidation volume of Venus platform was also influenced by the sharp price decrease due to the large number of XVS sales.
The drop in currency prices and increased liquidation volumes have had other cascading effects. According to DeBank, total borrowing on the nine lending agreements currently stands at approximately $16.769 billion, down approximately 36.75% from the May 11 short-term high; total lock-ups on these agreements currently stand at approximately $31.253 billion, down approximately 37.38% from the May 11 short-term high. This implies that the current market demand for borrowing has fallen more than the total amount of deposits, and borrowing rates have moved lower as a result.
Take Compound, the lending platform with the largest lock-up volume, for example. According to Compound’s official website, the current borrowing volume on Compound is about $6.043 billion, plunging by 20.30% in 24 hours, while the deposit volume is about $14.435 billion, down about 8.78% in 24 hours. The significant decline in borrowing demand has prompted a reduction in lending rates. Currently, major borrowing assets on Compound, such as ETH and USDC, are currently borrowing at rates of 2.67% and 4.32%, respectively, both down less than 0.1 percentage points in the last 24 hours.
DeFi and CeFi have undergone extensive connectivity, which makes the short term decline in coin prices present more systemic risk, however, this can also be seen as a process of overall systemic rebalancing of the market.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/filecoins-first-lending-platform-defils-value-goes-far-beyond-crossing-bulls-and-bears/
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