ETH Price Tanks, Bringing DeFi Tokens Down With It
2 min read
Cryptocurrency traders and investors in the US today awoke to significant losses across the market. BTC dropped by more than 5%, falling as low as $55,800, bringing ETH, the second biggest crypto asset my market cap, down with it.
ETH today shed more than 7% to its price, losing a week’s worth of gains. ETH is currently trading for $1,948 per token.
And as ETH goes, so goes the DeFi market.
DeFi, short for “decentralized finance,” is a catch-all term that describes a collection of non-custodial, peer-to-peer financial products. This includes lending, borrowing, and trading services that function without the need for a middleman, like a bank. Many of these platforms have their own crypto tokens—which throughout 2020 have skyrocketed in price.
Yesterday, the combined market cap for DeFi tokens topped $100 billion, according to CoinGecko. Meanwhile, total value locked—a metric that measures the relative popularity of DeFi protocols based on the amount of money flowing through them—topped $51 billion for the first time, according to data from de DeFi aggregator DefiPulse. For those awaiting a “correction” to the market, that came today.
Uniswap’s UNI token had a sharp drop of almost 8%, currently sitting at $28.8 after falling to $27.90. Uniswap is a decentralized finance protocol that is used to exchange cryptocurrencies with no centralized entity overseeing any transaction. The UNI token is used to facilitate transactions on the increasingly popular platform. UNI’s price drop today brings it back to the levels registered in early April.
PancakeSwap is another DeFi protocol that runs on the Binance Smart Chain, a blockchain with support for smart contracts developed by the crypto exchange Binance. Its native token $CAKE dropped 4.7% today, falling to $15.40 before recovering a bit to its current price of $17.60.
SushiSwap is another popular decentralized exchange in the world of DeFi. It’s basically a clone of Uniswap, and its own SUSHI token today fell by 7%.
Aave, a decentralized lending platform known for its “flash loans,” also caught fire in 2020. The token has skyrocketed in price by 67,000% since October. Today, however, the coin dropped by nearly 11%, now trading for around $350.
Synthetix, a DeFi protocol that lets users create artificial versions of any assets and gain exposure to their price, makes use of its own “DeFi token” SNX on the platform. SNX today dropped by 12.2% and is now hovering around $19.17.
All in all, it’s not a great day to have joined the DeFi party late. But if you got in early, or are in it for long-term “future of finance” promises, today’s sizable losses may not seem very big at all.
