Total Clearing Volume Hits New High, DEX Trading Volume Surges: Taking Stock of the Impact on the Ethereum DeFi Ecosystem During Market Collapse

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Market Collapses, Total TVL Drops by 24%

Since 2020, Decentralized Finance (DeFi) has been a very popular concept, accumulating billions of dollars in funds in just a few months. According to data from DeFi Pulse here, as of May 12th, the Total Value Locked (TVL) of DeFi protocols on the Ethereum blockchain was approximately $870 billion.

However, with the significant price retracement in the cryptocurrency market, the DeFi sector is heavily impacted due to the volatile nature of most assets being crypto assets. With most tokens experiencing rapid retracements of over 30%, the total TVL is inevitably affected. Data shows that in less than two weeks, TVL has dropped by over 24% to $660 billion, a decrease of over $210 billion.

Furthermore, following the sharp decline, the protocols with the highest TVL are dominated by Maker, Aave, and Compound lending protocols, followed by the stablecoin exchange protocol Curve and the Ethereum Layer 2 protocol Polygon. The overall ranking is not significantly different from May 12th, except that Uniswap, which was originally in fifth place, has been replaced by Polygon.

Total Liquidation Volume Hits New High

During the market downturn, lending platforms also experienced a large-scale liquidation and deleveraging activities. According to data from DeBank here, the total liquidation volume on major lending platforms on the Ethereum blockchain reached $320 million yesterday. Even during last year's Black Swan event on March 12th, the total liquidation volume was only $16.7 million.

DEX TVL Plummets, Trading Volume Surges

Despite significant impact on the Total Value Locked (TVL) of most decentralized exchanges (DEX), the trading volume of these protocols remains unaffected. According to data from Dune Analytics on trading volume here, in the past 7 days, Ethereum DEX trading volume reached $41 billion, with a 24-hour volume of $12 billion, showing significant increases.

However, this growth may not necessarily be due to an increase in users or adoption rates, but rather an increase in arbitrage activities between DEX and centralized exchanges (CEX) due to market volatility. Additionally, a significant portion of the trading volume in the past 24 hours came from a series of liquidation activities caused by the market crash. Most of the trading volume is concentrated in the two DEX platforms, Uniswap and Sushiswap.

Gas Fees Surge, Investors Frustrated

Under the influence of arbitrageurs and large-scale liquidation activities, the Ethereum blockchain is in an extremely congested state, with Gas fees exceeding 1000 gwei for a period of time, resulting in transaction costs of over $100 and over $400 for Uniswap transactions. This has led retail investors to be unable to execute any operations due to the high fees.