Many DeFi projects are in free fall. Both Uniswap (UNI), PancakeSwap (CAKE), SushiSwap (SUSHI) as well as the prices of the Aave (AAVE) and Compound (COMP) lending protocols have plummeted in recent days. Only tokens from the two DeFi exchanges for derivatives trading, dYdX (DYDX) and Perpetual Protocol (PERP), were able to withstand the sharp correction. This is likely because trading volumes on both exchanges increase when crypto market volatility increases. Since traders can bet on both falling and rising prices on dYdX and the Perpetual Protocol, the two decentralized exchanges benefit from both rising and falling prices.
Total Value Locked Down
Total Value Locked (TVL) in the DeFi area behaves completely differently during a market correction. Because so much of the TVL in DeFi consists of cryptocurrencies like Ethereum or Bitcoin, it can lose a lot of value in a market correction. This market correction has also shown that capital in DeFi can be greatly reduced in the event of corrections. On Friday alone, the TVL in DeFi lost around 20 percent of its value.
At press time, the TVL is at $250.52 billion, the lowest level since December 14, 2021.
OpenSea buys DeFi wallet providers
Largest non-fungible token (NFT) trading provider Opensea announced on Jan. 18 that it has acquired DeFi wallet provider Dharma Labs. Dharma Labs was purchased for an undisclosed sum and is expected to expand the product range of NFTs. OpenSea in the coming months. In a statement, Devin Finzer, CEO of OpenSea, said that Dharma Labs aims to catapult NFTs into the mainstream. More specifically, it aims to improve the experience of buying, minting, and selling NFTs on OpenSea and adding DeFi capabilities. For users, this means that it will probably soon be possible to buy NFTs directly with fiat money on OpenSea.
DeFi access for institutional investors
In a governance vote, AAVE token holders voted to launch the institutional-grade Aave Arc project on the Ethereum Arbitrum and Optimism scaling solution. Together with Fireblocks, the DeFi project wants to offer institutional investors their own, regulated access to the DeFi world, according to Stani Kulechov, founder and CEO of Aave.
Aave Arc allows institutions to use Aave as any other user would. The only difference is that they can do it in a separate environment that ensures strict KYC and AMLY standards.
In this way, Aave Arc allows institutions to reap almost all the benefits of DeFi while still meeting their compliance requirements. Until now, this remains a rarity in DeFi. Institutions looking to use Aave Arc include Anubi Digital, Bluefire Capital, Canvas Digital, Celsius, CoinShares, GSR, Hidden Road, Ribbit Capital, Covario, QCP Capital, and Wintermute.
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