What you need to know about the collapse of DeFi after the Terra episode

The bear market, which pulled both cryptocurrencies and NFTs, is now heading towards the next goal. The DeFi sector seems to be the next in line of bloodshed. DeFi’s Total Value Locked has fallen dramatically since early April, with a major hit across the Web3 space.

DeFi’s TVL fell below $110 billion for the first time since July 2021. The DeFi space is down about 60% since its recent peak in early April when TVL hit $230 billion. Now, there are several reasons that can explain the recent performance of the DeFi space.

In May alone, Terra’s crash cost the crypto industry over $40 billion. During the crash, the prices of major cryptocurrencies hit a regional bottom in 2022. bitcoin [BTC] Ethereum Drops To $26,500 [ETH] It plummeted to $1,600 during the market sell-off.

S&P 500 fell Shorter than 20% to identify bearish trends putting more pressure on risky assets. After this confirmation, BTC fell again. Wiretapping The “Extreme Fear” area of ​​the Fear & Greed Index.

The Ethereum network boasts the largest TVL figures, but at the time of writing, it has dropped more than 70% to $70 billion since January. Solana also fell more than 50%. It hovered around $8 billion in April, then dropped to $4 billion after Terra crashed.

Source: The Block/ DeFiLlama

The most interesting example is that of the Terra blockchain itself. Currently ranked 29thOne Its total value is $129 million. Once upon a time, it was DeFi’s second largest before the de-pegging crisis. The Terra project had a total of $31 billion stored in DeFi, which has since disappeared.

Screenshot 2022 05 22 at 4.06.51 PM

Source: DeFiLlama

We have good news for DeFi ghost towns.

TRON recently gained momentum after a brief climb to third place in the DeFi space.rd Spot in terms of TVL. However, Avalanche raked the charts again and dropped TRON to #4.One Classes.

TRON is the only one of the top 10 networks that has seen some positive growth over the past 30 days. The network was strengthened with the addition of the JustLend project. The new project, unveiled via a tweet on May 16th, currently stands at $1.8 billion in TVL on the TRON network, accounting for over 40%.

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