In the summer of 2020, the DeFi market exploded to infinity riding on use-cases like staking, borrowing and yield farming. However, over time, the market died down due to bearish sentiments. At the time of writing, the second quarter market cap of DeFi had fallen abysmally. But there have been some sharp upsides and downsides happening in tandem nonetheless.
What’s Going On?
The DeFi market has been enmeshed in hacks. Protocols like Rari and Inverse Finance simultaneously lost $1.2 million and $11 million respectively. Hence the investors’ sentiments have gone for a toss. But despite this, there hasn’t been a sharp fall in the number of active users. In the Q2, there’s just a 34.5% shrinkage which pulled the number of users from 50,000 to 30,000.
This has happened sharply after the Terra Luna and UST collapse. It is not the DeFi market that has fallen. Rather, even the NFT market has dwindled to a new low. NFTs trading volume had fallen 26.2% from its peak volume. The last month has seen the lowest volume in the last 12 months. At the moment, it is very hard to tell what will happen in the future.
The Fed has recently released the consumer inflation Index report that said a devastating 9.1% inflation. This has been the highest since 1981, and if this has to continue, it would further put the market at the backfoot. It is highly likely that we may ot be at the bottom and there’s more downside to this.