Although DeFi is still hot, it has actually entered a moment of high volatility


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For every new development in the cryptocurrency space, there is enough narrative about the DeFi bull market.

From the KuCoin hacking incident to the recent CFTC charging of BitMEX, in the long run, each incident has a positive impact on the ROI (return on investment) of the DeFi project. However, in fact, the short-term impact of DeFi is more relevant to traders.

Many retail traders have invested funds in DeFi projects to improve the return on investment, and DeFi has been insufficient in most aspects of its performance in the past month. The return on investment of projects like Yearn Finance, Compound and Chainlink reached 500% before September. However, throughout September, their return on investment declined rapidly.

Taking into account the profit of 1 day, 3 of the top 5 projects have negative TVL (Total Locker Valuo total lock-up amount).

According to data from DeFiPulse, TVL has increased by 30% in the past 30 days. However, the increase in TVL does not mean that DeFi projects are profitable.


The long-term returns of DeFi projects such as UMA and AKRO are optimistic. However, the 7-day and 30-day short-term returns fell by 19% to a maximum of 67%.

The projects listed in the Messari chart are those with the lowest returns in the past week and month. However, the ROI of the entire DeFi ecosystem has also seen a similar decline, which may be due to unfounded hype or lack of actual utility or application of projects in the real world.

As most facts show, every adverse event in the Bitcoin or cryptocurrency field has a significant impact on DeFi, which may backfire in the short term. Retail traders are tired of the lack of trading volume and price declines of some altcoins in Bitcoin and spot exchanges, so they turn to DeFi, but their portfolios have been hit.


Popular trader and industry opinion leader Hsaka posted the following tweet during the ebb of DeFi.

He said in a tweet that perhaps the events of the past few days (Kucoin and BitMex events) support the long-term bullish story, but if you take off your rose-colored glasses, you will find that DeFi has recently been the most volatile area.


DeFi has recently entered a larger range of volatility (systematic risk), and most projects have a return rate of -40% to -60%. Although long-term prospects and forecasts are essential for every investment tool, it is also necessary to focus on short-term performance, as this has a clear impact on the trader’s portfolio.

The performance of some top DeFi projects is also poor, losing return on investment every day, so we must admit that we should rebalance our investment portfolio, this is very important.

Some cryptocurrencies with a sufficient rate of return can help traders make up for losses caused by DeFi, but in the long run, some DeFi projects are still promising.

The original text comes from ambcrypto, compiled by the BluemountainLabs team, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.