Uniswap and Aave continue to operate during ongoing FTX Crisis

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The recent crash of FTX sent shock­waves through the entire dig­i­tal asset mar­ket, sig­nal­ing its own impend­ing col­lapse. Even Sam Bankman-Fried, the new­ly appoint­ed CEO of the plat­form, expressed his agree­ment that this was an unprece­dent­ed show of mismanagement.

While the pop­u­lar best cryp­to exchanges kept with­er­ing, the DeFi mar­ket main­tained on tracks with­out any issue. It even attract­ed sup­ply with desir­able inter­est rates while facil­i­tat­ing non-cus­to­di­al transactions.

The mar­ket even liq­ui­dat­ed col­lat­er­al­ized loans at the Ethereum network’s speed. A recent report has shown how Uniswap and Aave have been unaf­fect­ed by the down­fall of FTX. Aave offered up to 7.3% inter­est on Gemini’s sta­ble­coin, GUSD, only this week.

Users first pan­icked as Gem­i­ni delayed prod­uct with­drawals as a result of the FTX con­ta­gion. Thus, Aave cus­tomers with­drew GUSD shares in order to bor­row the asset en masse. The major­i­ty of those who bor­rowed believed that token hoard­ing was prevalent.

This result­ed in a dra­mat­ic increase in lend­ing rates, which attract­ed more liq­uid­i­ty to the plat­form. In oth­er words, users had the oppor­tu­ni­ty to earn real-time rewards for hold­ing a tem­porar­i­ly-risky asset.

On the oth­er hand, the most pop­u­lar DEX, Uniswap, sur­passed Coin­base in terms of ETH trad­ing vol­ume. Users of cryp­tocur­ren­cies have begun with­draw­ing funds from exchanges and invest­ing them in non-cus­to­di­al alter­na­tives. It aid­ed the market’s largest and most liq­uid DEX in cap­tur­ing a sig­nif­i­cant amount of volume.

Besides Uniswap and Aave, gen­er­al liq­uid­i­ty providers have also enjoyed a hike in prof­it with the increased vol­umes. For exam­ple, the USDC and WETH pools on Uniswap gen­er­at­ed over 3.8 mil­lion dol­lars in fees dur­ing the pre­vi­ous week.

Such moves are sig­nif­i­cant indi­ca­tions of DeFi’s innate capac­i­ty, regard­less of mar­ket conditions.

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