Traders were aware of the risks of investing in DeFi, or decentralized finance, this summer's money printing bonanza that made people rich from so-called "yield farming," where investors in non-custodial lending protocols and liquidity pools earned extra tokens, netting annual yields of more than 1000%.
They just never hoped they'd have to face those risks. That day came today, when several of the coins powering the largest DeFi protocols crashed hard into the floor.
$SUSHI, the coin that powers SushiSwap, a kind of yield farming version of decentralized exchange Uniswap, fell by 53% in the past 24 hours alone. Perhaps related: The so-called Chef Nomi, the creator of Sushiwap, cashed out today.
With a market cap of $134 million, $SUSHI is still the latest crazy success story in the already-nuts DeFi world; on Wednesday, SushiSwap accrued over a billion dollars of value in its smart contracts.
Even crazier: it only launched on August 26.YFI, the coin that powers yEarn, the yield aggregator protocol masterminded by DeFi hotshot Andre Cronje, dropped by 31% in the past 24 hours, to $19,582. Zoom out a little and it gets even worse: The price of a single YFI coin hit $39,306 on Monday.
But YFI is still impressive. At $19,582, the cost of a YFI is about the same price as Bitcoin's all-time high back in 2017. (Granted, YFI's token supply is 30,000 to Bitcoin's 18 million).So why have the prices of the major DeFi coins crashed?
It could be the case that the prices of DeFi coins are correlated with the rest of the crypto market. All of the major DeFi protocols live on the Ethereum blockchain, meaning that ETH, the second-largest cryptocurrency by market cap, is something of a common currency on these protocols.
ETH-18.18%$323.2524H7D1M1YMax
Aug 6Aug 10Aug 14Aug 18Aug 22Aug 26Aug 30Sep 3300350400450500ETH Price
ETH crashed by 12% in the past 24 hours alone, and Bitcoin, the largest cryptocurrency by market cap, has lost about $2,000 of worth this week, falling from about $12,000 to roughly $10,000.
THE VIEWS AND OPINIONS EXPRESSED BY THE AUTHOR ARE FOR INFORMATIONAL PURPOSES ONLY AND DO NOT CONSTITUTE FINANCIAL, INVESTMENT, OR OTHER ADVICE.
They just never hoped they'd have to face those risks. That day came today, when several of the coins powering the largest DeFi protocols crashed hard into the floor.
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$SUSHI, the coin that powers SushiSwap, a kind of yield farming version of decentralized exchange Uniswap, fell by 53% in the past 24 hours alone. Perhaps related: The so-called Chef Nomi, the creator of Sushiwap, cashed out today.
With a market cap of $134 million, $SUSHI is still the latest crazy success story in the already-nuts DeFi world; on Wednesday, SushiSwap accrued over a billion dollars of value in its smart contracts.
Even crazier: it only launched on August 26.YFI, the coin that powers yEarn, the yield aggregator protocol masterminded by DeFi hotshot Andre Cronje, dropped by 31% in the past 24 hours, to $19,582. Zoom out a little and it gets even worse: The price of a single YFI coin hit $39,306 on Monday.
But YFI is still impressive. At $19,582, the cost of a YFI is about the same price as Bitcoin's all-time high back in 2017. (Granted, YFI's token supply is 30,000 to Bitcoin's 18 million).So why have the prices of the major DeFi coins crashed?
It could be the case that the prices of DeFi coins are correlated with the rest of the crypto market. All of the major DeFi protocols live on the Ethereum blockchain, meaning that ETH, the second-largest cryptocurrency by market cap, is something of a common currency on these protocols.
ETH-18.18%$323.2524H7D1M1YMaxAug 6Aug 10Aug 14Aug 18Aug 22Aug 26Aug 30Sep 3300350400450500ETH Price
ETH crashed by 12% in the past 24 hours alone, and Bitcoin, the largest cryptocurrency by market cap, has lost about $2,000 of worth this week, falling from about $12,000 to roughly $10,000.
DISCLAIMER
THE VIEWS AND OPINIONS EXPRESSED BY THE AUTHOR ARE FOR INFORMATIONAL PURPOSES ONLY AND DO NOT CONSTITUTE FINANCIAL, INVESTMENT, OR OTHER ADVICE.
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Francisco Gimeno - BC Analyst Nothing is really new here. Common sense says these kind of small crashes were going to happen even if we didn't know about the time and way. Craziness and speculation can go up to a point only, and also global markets crisis influence this one. DeFi will survive and evolve, crypto will continue to evolve and go up and down. Just make sure you DYOH and be cool.