21 May Crypto Bloodbath Impact: DeFi TVL Sinks to Lowest Levels Since June 2021
The recent crypto market downturn has not only hurt retail investor sentiment but also the decentralized finance space.
According to the popular resource and aggregator DeFi Llama, the total value locked across various chains has declined to levels last seen in June 2021.
Bitcoin, for one, has plunged deep into the “Extreme Fear” zone as it hit its lowest reading in more than two years on the BTC Fear and Greed Index this week.
DeFi markets weren’t immune to the widespread negative sentiment either.
Data compiled by DeFi Llama revealed that the TVL dropped to $140 billion on May 21, down by more than 50% since the beginning of the year.
The market leader, Ethereum, which accommodates a majority of the locked value, also slumped hard. It shed half of its value from $187 billion in January to $92 billion at the time of writing.
Avalanche also noted a similar trend as TVL across all the DeFi protocols on its blockchain currently stood at $6.49 billion from an all-time high of $13.7 billion recorded in December last year.
Solana’s infrastructure had come under intense criticism for its multiple outages. The mitigation measures that the devs announced are yet to help the layer 1 blockchain protocol’s TVL emerge out of the yearly lows, which hovered near $4.5 billion.
In addition to the contagion effect, it is also important to note that the DeFi sector became a breeding ground for fraudulent activities this year.
Web3 and blockchain security firm, CertiK had recently revealed that more than $1.6 billion in crypto was stolen from DeFi users, far exceeding the total amount stolen in 2020 and 2021 combined.
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