Silicon Valley Bank Implosion Whipped Up Frenzy of DeFi Transactions As Crypto Assets Rebounded: DappRadar

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Sil­i­con Val­ley Bank’s (SVB) high-pro­file implo­sion last week whipped up a fren­zy of decen­tral­ized finance (DeFi) trans­ac­tions, accord­ing to mar­ket intel­li­gence plat­form DappRadar.

Dap­pRadar notes in a new report that DeFi tends to be high­ly sus­cep­ti­ble to mar­ket con­cerns and crashes.

Last week­end, USD Coin (USDC) lost its peg to the US dol­lar fol­low­ing news that Cir­cle, the stablecoin’s issuer, had $3.3 bil­lion of its $40 bil­lion reserves stuck in the col­lapsed SVB. The sec­ond-largest sta­ble­coin by mar­ket cap dropped as low as $0.8788 before reclaim­ing its peg on Monday.

This roller­coast­er had a rip­ple effect on the DeFi sec­tor, explains DappRadar.

“On 11 March, fol­low­ing the SVB crash and USDC depeg­ging, the DeFi mar­ket expe­ri­enced a sig­nif­i­cant drop in its TVL, falling by 9.6% from $79.28 bil­lion to $71.61 bil­lion. The news cre­at­ed pan­ic among investors, lead­ing to a con­sid­er­able sell-off and a decrease in the TVL.

For­tu­nate­ly, on Mon­day 13th, USDC reserve deposit held at Sil­i­con Val­ley Bank was ful­ly avail­able to the pub­lic, which helped sta­bi­lize the mar­ket. This announce­ment led to a 13% spike in DeFi TVL, reach­ing $81.15 billion.”

TVL stands for “total val­ue locked,” which rep­re­sents the total cap­i­tal held with­in a blockchain’s smart con­tracts. TVL is cal­cu­lat­ed by mul­ti­ply­ing the amount of col­lat­er­al locked into the net­work by the cur­rent val­ue of the assets.

Dap­pRadar notes that the num­ber of unique active wal­lets inter­act­ing with DeFi con­tracts surged from 421,026 on March 8th to 477,094 on March 11th, a 13% increase. Trans­ac­tion count increased by 23% from 1,356,483 to 1,668,992.

The decen­tral­ized exchange (DEX) Uniswap (UNI) was behind that activ­i­ty surge, accord­ing to the mar­ket intel­li­gence platform.

“Uniswap V3, one of the most pop­u­lar decen­tral­ized exchanges, expe­ri­enced a sig­nif­i­cant increase in UAW, sur­pass­ing 67,000 on Sat­ur­day March 11th, with a vol­ume of $14.4 bil­lion, the high­est fig­ure ever reg­is­tered for V3. The 67,000 UAW were the high­est reg­is­tered on a Uniswap Dapp since sum­mer of 2021.

More­over, Uniswap V3 avg. trans­ac­tion size on Sat­ur­day was $170,080, almost dou­ble than the mean, sig­nal­ing that Ethereum DeFi whales were high­ly active dur­ing last weekend.”

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