The Decentralized Finance (DeFi) industry has managed to hold on to its daily active users despite the slowed on-chain activity. In quarter two (Q2) the DeFi sector suffered a 74.6 per cent decline in the market cap. However, the users continue to remain active.
According to CoinGecko, an aggregator of crypto data, the cap fell from a value of $142 million to $36 million in Q2. This is a direct consequence of the tragedy that struck Terra and its infamous stablecoin TerraUSD (USTC) in the month of May.
Reasons for the Crash
A rise in the exploits of Decentralized Finance was observed by CoinGecko as well. Hacking problems, affecting Rari and Inverse Finance, resulted in losses of 1.2 million and $11 million respectively.
Investors are losing faith due to such nefarious activities prompting a fall in the value of tokens. In spite of all the bad press, DeFi has managed to keep most of its active users.
DeFi saw a drop of just 34.5 per cent in its total number of users. Earlier there were 50,000 users but by the end of Q2 there are 30,000.
Spikes in DeFi Activity
In the month of May when Terra plummeted, DeFi experienced its first spike. The second spike was observed in the month of June after Celsius, a digital asset platform, placed withdrawal restrictions. Basically, the failure of centralized assets has encouraged people to stick with DeFi.
CoinGecko also reported a 26.2 per cent decline in the NFT (Non-fungible Token) trading volume. A decline in the trading volume on the Ethereum (ETH) platform is believed to have caused this.