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While DeFi Tokens Are Selling Off, Total Value Locked Jumps

While DeFi Tokens Are Selling Off, Total Value Locked Jumps 101
Source: Adobe/kues1

After seeing a near-meteoric price rise this summer, the tokens of many well-known DeFi protocols were hit by a wave of selling pressure today, causing most tokens in the space to drop between 5% and 20% over the past 24 hours. However, the total value locked in DeFi jumped sharply today.

As of press time (11:06 UTC), nearly all tokens listed under the “DeFi” tab on Coinpaprika were in the red over the past 24 hours. Among the biggest losers were SushiSwap (SUSHI), Curve (CRV), and Synthetix (SNX), with 24-hour price drops of 22%, 21%, and 14%, respectively.

Today’s crash in DeFi tokens can also be seen on Coinpaprika’s ranking of the most valuable DeFi assets in circulation:

While DeFi Tokens Are Selling Off, Total Value Locked Jumps 102
Source: coinpaprika.com

Meanwhile, looking at total value locked (TVL), however, today’s figure is still up from yesterday, as ethereum (ETH) locked in DeFi jumped sharply today.

While DeFi Tokens Are Selling Off, Total Value Locked Jumps 103
Source: DeFi Pulse

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While DeFi Tokens Are Selling Off, Total Value Locked Jumps 104
Source: DeFi Pulse

However, as reported by Cryptonews.com, the TVL measure is not very accurate in evaluating the shape of the industry.

On Twitter, members of the community discussed the price drops across the DeFi space, particularly in relation to the “impermanent losses” that are sometimes absorbed by liquidity providers on DeFi protocols when one asset in a trading pair changes quickly in price in relation to the other.

And while the loss is said to be “impermanent,” this is only true if the prices of the tokens within the DeFi protocol (automatic market makers – AMMs) return to the level they were at when the person began providing liquidity. In other cases, the impermanent loss becomes a permanent loss.

And while many Ethereum-based DeFi tokens fell hard today, Ethereum’s native ETH token fared slightly better, dropping by 4% over the past 24 hours and trading at USD 363. The price is up by 4.5% in a week.

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