Blockchain, Cryptocurrency

DeFi Is Not Always A Bully

There are adequate narratives of DeFi’s bullishness in reaction to every new improvement in the crypto space. From the KuCoin hack to the latest CFTC charges on BitMEX, every event is identified to absolutely impact the DeFi projects’ ROI in the long run. However, the immediate and short-term implications of DeFi are more relevant for traders.


Retail traders have parked funds in DeFi projects for their high ROI, and the performance of DeFi in the past month has fallen short in most respects. Projects like Yearn. Finance, Compound, and Chainlink clocked ROI upwards of 500% before September; however, there was a rapid drop in ROI throughout September.

Taking into account 1-day returns, 3 of the projects that rank consistently in the top 5 have negative TVL.

Lowest 24-hr returns on DeFi Projects || Source: DeFiPulse

Based on data from DeFiPulse, TVL has increased by 30% in the past 30 days; however, this increase in TVL is not an indicator of the profitability of DeFi projects.

30-day and YTD returns on DeFi projects || Source: Messari

The long term returns on DeFi projects like UMA and AKRO are optimistic; however, the short term returns – 7 days and 30 days are -19% to -67%. The projects listed in the chart from Messari are the ones with the lowest returns in the past week and month. However, the overall DeFi ecosystem has suffered a similar drop in ROI, which could be due to baseless hype or lack of actual utility/ use in real-world projects.

The tale that every unfortunate event that occurs to Bitcoin or in the crypto space has a positive connotation for DeFi may have backfired in the short run. Retail traders, bored with the scarcity of volume and price action in Bitcoin and top altcoins on spot exchanges, moved to DeFi, and their portfolio has taken a hit.

Legendary trader and influencer, Hsaka tweeted on DeFi’s returns.

DeFi has been in the beta domain lately, and most projects have offered returns of -40 to -60%. While long-term outlook and prediction are crucial to every investment instrument, it is necessary to focus on short-term performance, which has the most visible impact on a traders’ portfolio. Top DeFi projects have performed poorly and are losing ROI every day, and it is essential to acknowledge the need to rebalance your portfolio if you must. There are enough altcoins with moderate returns to help traders recover the losses made in DeFi. However, for the ones in it for the long run, DeFi projects continue to hold hope.

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