The bear market that pulled down cryptocurrencies and NFTs alike is currently on to its next target. It seems that the DeFi segment is next-in-line for a bloodbath. DeFi’s Total Value Locked has fallen dramatically since early April, with prominent events wreaking havoc across the Web3 space.
The TVL on DeFi dropped below $110 billion for the first time since July 2021. The DeFi space has seen a drop of approximately 60% since its recent peak in early April, when the TVL tipped $230 billion. Now, there are several reasons that probably explain the recent performance of the DeFi space.
In May alone, Terra’s crash led to major turbulences in the crypto-industry with over $40 billion wiped out. During the crash, the prices of major cryptos hit their local bottoms for the year 2022. Bitcoin [BTC] dropped to $26,500 while Ethereum [ETH] plunged to $1,600 during the market sell-off.
The S&P 500 dropped by more than 20% briefly to confirm bear market tendencies piling more pressure on risk assets. After this confirmation, BTC took another dip and tapped the “Extreme Fear” zone on the Fear & Greed Index.
The most interesting case is that of the Terra blockchain itself. It is currently ranked 29th with a total value locked of $129 million. Once upon a time, it was the second largest in DeFi before the de-pegging debacle. Terra projects had a total of $31 billion stored in DeFi, which has since been wiped out.
The DeFi ghost town has some good news
TRON has recently gained momentum in the DeFi space after briefly climbing over to the 3rd spot in terms of TVL. However, Avalanche has clawed back up the charts, pipping TRON to the 4th rank.
TRON is the only network in the top-10 to see some positive growth over the last 30 days. The network has been boosted by the addition of the JustLend project. The new project that was released on 16 May via a tweet currently accounts for more than 40% with $1.8 billion in TVL on the TRON network.