DeFi Continues to Outperform the Market After Market “Crash”

Even as Bitcoin dipped, DeFi markets like the Binance Smart Chain kept on outperforming the rest of the market.

By
Wilfred Victor
on
May 27, 2021
Category:
Blockchain News

Outperformance Continues

Panic sales struck the market and saw the fast decline of total market assets, including blue-chip coins of BTC, ETH, and DeFi top-ranking DEXes, Lending Protocols, and Derivatives tokens. The total market capitalization of above $2 trillion declined to a present $1.7 trillion in days. But a component of DeFi stood tall amidst this panic and sell-off that took place the past few days - its volume, which continued to outperform market expectations.

Panic Sell-Off and the Growth of DeFi Activities

The resultant effects of market uncertainties, fueled by varying degrees of adverse events, have struck once again. The event set off the market in a frenzy of panic selling, consisting of the movement of assets for a fast sell-off, swapping crypto coins for stablecoins that held fairly against their pegs. This also included taking advantage of the decline by purchasing cheap blue-chip coins that hitherto were above 50-70% of its current price by big buyers.

These fast-paced activities took place in DEXes like Uniswap, Sushiswap, 1inch, and PancakeSwap as their underlying chains held firmly without issues, while centralized exchange platforms struggled with extreme volume trades. The increased volatility skyrocketed the volume to a record high, but the token valuation got badly hit; some corrections went as low as -70%.


A Comparison of both DeFi Chains of BSC and ETH Amidst the Crash

Ethereum Chain and DEX Reaction

Ethereum chain DeFi Total Value Locked (TVL) data obtained from DefiPulse is currently at $63.43 billion, maintaining a market dominance of 14.95%.

DeFi Pulse Data

Market TVL crashed from a peak of $88 Billion May 12 to the current rate as major DeFi components suffered a hit on its TVL from top to bottom. This includes platforms like Maker, AAVE, and Synthetix. But despite this gut-wrenching crash total volume traded on topmost DEX, Uniswap does the exact opposite - it skyrocketed.

1 Month of Daily DEX Volume obtained from Glassnode.


With increased volatility, DEX volume rocketed to all-time highs. A record volume of $11.7 billion was set on May 19th amid a selloff. Uniswap dominated with $5.7 billion in volume on $5.8 billion of liquidity, while Sushiswap was in a dominating second position at $2.8 billion on $3.5 billion of total liquidity.

Uniswap V1 Volume and TVL Analytics


May 19 and 23 saw the volume chart on Uniswap V1 making a peak of $2.61 billion and $1.86 billion, respectively. Indicating retailing sellers panic selling pressure on the DEX platform. However, the TVL showed strength despite the event and has continued to peak at $1.56 billion showing no sign of declining.

V2 Analytics


Likewise, its V2 daily volume saw a peak of $3.9 billion compared to the V1 $2.61 billion on May 19 and May 23 of $1.9 billion on the V2. The TVL, however, has continued to make a decline on the V2 amidst the declining market volume.


Binance Smart Chain and Dex Reaction 

The market dip sharply impacted BSC Volume, as the TVL moved down from its peak of $53 billion on May 10 to the current $19.974 billion.

BSC DeFi Volume Analytics


Compared to the ETH chain, BSC’s decline was more significant as the total transaction amounts continued to drop. Asset price drop on BSC was quite significant amongst other chains as the market sell-off was coupled with spreading flash loan events and rugpull reports like the PancakeBunny code exploit, FinNexus exploit, and the BogTools exploit filling the news space.

PancakeSwap Analytics

PancakeSwap, like its Ethereum counterpart, is the biggest Dex on the BSC platform, maintaining a TVL of above $7 billion. Its analytics gives insight to the May 19 and 23 events giving an overall perspective of the whole of BSC.

Unfortunately, at the time of this report, we can’t get a hold of the analytics for the months of both April and May. However, second source analytics from DBank gives the much-needed insight.

Dbank PancakeSwap Volume Analytics


May 19 is the chart’s peak, indicating a volume of $7 billion as sellers struggle to panic sell their holdings. May 23 came off with another peak of more than $1.5 billion in trading volume. At the time of this report, trading volume has dropped significantly from its peak to a through $265 million.


What does this signify for the overall market?

High volume on a DEX indicates either one of two things as earlier mentioned;

  • Market sell-off happening at a breakneck pace
  • Market buy by big volume traders aggressively taking advantage of the dip as investigated in this news report.

A safe comparison of the two biggest Dex platforms - Uniswap and PancakeSwap - has been comprehensively done in this review. Both DEXes and AMM platforms played critical roles in the DeFi bull run, and their volume outperformed the market despite the “crash.”

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Wilfred Victor

Ace finds himself as a blockchain enthusiast who is focused on growing with the entire crypto sector. He is an energetic and passionate writer who believes that all things are achievable.

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