Another Wave of DeFi Euphoria Coming? Chinese Users Withdrawing from CEXs and Putting into Yield Farming
Decentralized Finance (DeFi) has been growing like crazy, hitting $9.5 billion until positions winded and DeFi tokens went down like stones.
During the recent market correction, DeFi tokens were hit the hardest, which makes sense given that they have been rallying hard, leaving non-DeFi tokens in the dust.
The pullback resulted in wiping out $2 billion of the total value locked (TVL) in DeFi. Currently, $7.8 billion are locked in these protocols with Uniswap, Aave, Maker, Curve Finance, attracting over $1 billion each.
The DeFi market seems to be slowly getting back to its feet, which could be further propelled by China.
China Onboards the DeFi Train
Earlier this month, the number of unique searches for DeFi on WeChat surged to about 1 million.
“DeFi is getting started in China now,” said Molly, head of marketing at Hashkey Hub. She noted how only a few WeChat groups were discussing trading and farming DeFi tokens, but for the past few days, more and more people are getting into it.
“I’ve got invited to 6 Sushi groups today,” she shared, adding that many groups are also working together and forming a “farming fund” and planning their own projects altogether as well.
And Exits the Centralized Platforms
While DeFi is gaining traction in the country, an initiative about taking down the centralized exchange (CEXs) by withdrawing the funds from them is also spreading in the crypto community of China. Overall, the ETH reserves of exchanges have fallen nearly 11% from May high, as per CryptoQuant.
“The “withdrawal movement” is widely spread, but the actual impact is uncertain. Exchanges are also starting to defend, such as the crazy listing of DeFi coins to make users to gamble in the secondary market, and helping users with yield farming,” noted Colin Wu of WuBlockchain, a local media channel.
As the Chinese community launched the “coin withdrawal campaign” using the popular on-ramp USDT and further deleting their accounts entirely, many exchanges experienced “difficulties in withdrawing coins and shutdowns.”
Bringing a New Wave
The popularity of the yield farming, because of exorbitant percent of the rate of returns, and the recent nearly 35% drop in the price of Ether is driving Chinese crypto users. Many of them are buying the dips on exchanges then transferring them on DeFi protocols for farming.
All this activity led the daily Ethereum transaction fee to reach new highs. Daily ETH fees actually skyrocketed to a record $17.1 million earlier this month. This has made mining Ether profitable, which has increased the hash rate on the network considerably, noted Arcane Research.
This is resulting in the stock of Ether and other DeFi cryptos on the cryptocurrency exchanges “falling frantically,” said Wu.
It is possible, a new wave of DeFi mania may start soon, this time led by the new users in China, especially if they are just getting started.