After witnessing a consolidation phase that lasted for more than three months, the crypto market seemed to be returning to normal during the first days of September. However, the unexpected flash crash that took place on the 7th managed, once again, to change the narrative. The broader crypto market, at the time of writing, was facing further depreciation.
Immediately after the accident, the TVL on decentralized exchanges [DEXes] witnessed a notable fall. As seen in the accompanying chart, a cumulative value of $ 31.48 billion had been locked on these exchanges as of September 7. However, it managed to drop to $ 26.1 billion by the 11th.
The 16.8% drop mentioned above has been the most substantial since June. Despite the curve reversing direction and currently moving north, it should be noted that it was still below the $ 27 billion threshold.
The slight recovery observed has been led, in general, by SushiSwap. According to data from DeFiPulse, this DEX currently had more than $ 4.06 billion locked and registered an increase of 11% in the last day alone.
Curve Finance and Balancer’s TVL too, for that matter, were up 4% and 3% respectively and reflected values of $ 11.46 billion and $ 1.86 billion at the time of writing. In particular, the DeFi projects representing the DEXs recovered significantly better than the rest.
However, DEX’s daily volume was unable to recover from its lows. As seen in the attached chart below, the cumulative volume of change that turned above 5 billion on the eve of the collapse currently stood below 2 billion. In particular, Uniswap and SushiSwap volumes were affected followed by Balancer. Interestingly, Curve’s volume had already recovered from its lows.
Also, most of the majors mentioned operate on the Ethereum chain and the transaction fee hasn’t been too favorable lately. In hindsight, this factor also contributed substantially to the drop in volume. Also, it should be noted that stablecoin transaction count has not undergone any major change in recent times. Therefore, it can be said that their stagnation contributed to a great extent to the fall in volume.
Should HODL Users Expect Diminishing Returns?
The valuation of the tokens associated with these exchanges was also drastically affected. For example, Uniswap, Curve, SushiSwap, and Balancer lost 22%, 6%, 23%, and 24% of their respective value over the past week. However, at the time of writing, all tokens were trading green, thanks to a 24-hour surge of 1%, 6.4%, 7%, and 3% respectively.
The DEX space has witnessed several such accidents in the past and has recovered fairly quickly from almost all of the notable ones. Considering how they have reacted in the past, it would be fair to say that the current dark phase would not be prolonged. The recovery would be quick and in hindsight HODLers tokens would get even higher returns.
This is a machine translation of our English version.