What Ethereum price took off, Defi space also shot up. Several Defi tokens rallied as the market took a bullish turn. While not surprising considering the larger market rally, it was noteworthy that the move in the Defi space was somewhat independent of it.
On August 21, when the crypto market capitalization hit the $ 2 trillion mark, and most of the major alts saw weekly gains, AAVE and Uniswap posted weekly losses. However, at the time of AAVE publication, Manufacturer and the compound turned green. Even though the metrics for Defi looked good, regulatory concerns loomed over the space after Gary Gensler stated that the SEC could regulate decentralized finance. (Defi) projects.
High risk behavior
This month turned out to be a good trip for Defi as several metrics turned positive. What indicated In a report by Glassnode, the volume of deposits and loans in the loan protocols increased along with the positive performance of the prices of the tokens. Among the three market leaders, Maker, Aave and Compound, a combined value of $ 42 billion was deposited as collateral.
In addition, the increase in lending signaled a renewed interest in risky behavior in the market, with a combined value of the principal loaned reaching $ 21.7 billion. Interest rates have also shown some volatility in recent times, as demand for loans has picked up. The total value loaned exceeded the ATH established in May, while the total collateral deposited remained slightly below the ATH at $ 2 billion.
This high-risk behavior was particularly surprising considering the increase in Defi Cheats and carpet pulls. Notably, according to the analysis firm, Aave borrowers have taken out $ 8.5 billion in total, compound borrowers have taken $ 7.4 billion, and Maker borrowers have taken $ 5.8 billion.
Along with that DEX activity it also looked healthier, with monthly estimates showing growth in volume compared to previous months. Total trade volume at the time of writing was $ 50 billion and is on track to reach approximately $ 80 billion this month.
Cash flow into the Defi space with a focus on increased market borrowing further indicated the market’s appetite for risk amid rising interest rates. With the market currently volatile, it will be interesting to see what the fate of major Defi tokens like AAVE, COMP and MKR is in the coming days.
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