In the past month, the crypto market has experienced considerable volatility, as the altcoin bull market that lasted for 6 months ended suddenly and the price of Bitcoin (BTC) was recently rejected at $12,000.
At the same time, as the total locked value of the DeFi platform has surged to more than 10 billion US dollars, the DeFi field has performed amazingly, but at the time of writing, the field is in a moderate adjustment.
According to Cointelegrah, when Bitcoin (BTC) and Ethereum (ETH) began to fall in late September, DeFi tokens plummeted one after another. Then, US President Donald Trump accidentally diagnosed new coronary pneumonia, which put additional pressure on the DeFi market.
Nevertheless, the value of Maker (MKR), Uniswap (UNI), Yearn.finance (YFI) and other decentralized finance (DeFi) tokens has plummeted in the past two weeks. However, various data indicate that the fundamentals of the major DeFi tokens are still strong.
Most notably, in the past 30 days, the earnings of Maker, Uniswap and Aave have surged by 130% to 440%, and this happened when their token prices fell sharply.
Major DeFi tokens may be oversold
It is difficult to measure the value of DeFi projects based on fixed indicators, because each indicator is different in structure, but the two most widely used indicators are revenue and locked-in total value (TVL).
Revenue shows how much money the DeFi project receives from its products, which is an effective indicator of general user needs and market sentiment.
TVL shows how much funds are locked in the DeFi agreement, usually showing the confidence of investors and the market share of the project. TVL is also related to the liquidity and transaction volume of various mortgage pools.
As shown in the figure above, the revenue of major DeFi agreements has skyrocketed in the past 30 days. However, the price of DeFi tokens plummeted by 20% to 82%. For example, Maker has fallen by 24% in the past 30 days, but in the same period, its revenue has increased by 449%.
If the TVL of a project is stable and revenue is increasing, a sharp drop in prices may indicate that the DeFi market is extremely cautious. Similarly, the prices of Uniswap and Aave plummeted, while their revenues both increased by more than 235%.
Jeff Dorman, Arca’s chief investment officer, explained that fundamentals do not necessarily change with price. Dorman cited changes in the returns of the DeFi protocol as compared to the price of tokens. He wrote:
“Prices and fundamentals don’t always change as you think. DeFi is a good example of this month. According to data from Messari and Token Terminal, this is the change in the revenue of some DeFi protocols in 30 days, and Changes in prices in 30 days.”
In the medium term, Dorman emphasized that this is the “perfect” setting for value investors. It shows which projects have fundamentals that exceed the price loss caused by the recent cryptocurrency market adjustment. He pointed out:
“Not all tokens are the same. Some people do not generate economic value regardless of how much profit, while others directly generate value when their income increases. For value investors, this is a perfect setting. The industry It is selling collectively, but there will be winners and losers in the long run.”
TVL and daily DEX users continue to grow
The data on the chain of digital asset data shows that the TVL of the DeFi market remains relatively unchanged. Although most DeFi tokens have fallen by 30% to 50%, TVL remains above $10 billion.
Take Yearn.finance as an example. Its native YFI token has fallen by 44% in five days, and this digital asset has now fallen by 56% from its peak.
Despite the alarming drop, investors and analysts are still optimistic about the project. Earlier this week, the Year.finance team revealed that it plans to release a new stablecoin custody business.
Defipulse data shows that Yearn.finance’s TVL is about $700 million, which further proves that the token price does not reflect the feasibility of the project, and this figure is close to its TVL when the price was higher in August.
