Chinese Investors Turn to Yield Farming Despite The Recent Crash of DeFi Token Prices

Decentralized Finance has fast become the biggest investment phenomenon to come from the cryptocurrency space since Initial Coin Offerings. Even so, investors in China, despite their countries hostility towards crypto, are embracing it with feverish enthusiasm too.

Chinese investors are jumping onto decentralized finance (DeFi) despite the recent collapse in crypto markets. In an observation first published on Twitter by Chinese journalist Colin Wu, Chinese crypto exchanges are facing a log-jam of withdrawals as users rush to invest in DeFi tokens.

Over the past few weeks, searches for the word “DeFi” have skyrocketed on the popular Chinese messaging app, WeChat, reaching a high of 900k searches on September 7th. The increase in anticipation and demand for these tokens arises from the supernormal growth and APY returns offered by farming protocols, a trend Wu believes will continue in the future.

Wu also reported a shrinking liquidity pool on local crypto exchanges as investors withdraw large amounts of crypto to cycle them into DeFi. The withdrawals caused several exchanges to shut down operations to prevent a bank run on their liquidity pools.

The Chinese crypto community has since responded to exchanges locking them out of their fund's launching, a “coin withdrawal campaign.” The campaign calls on all investors from troubled centralized crypto exchanges to withdraw their tokens and “delete their trading accounts.”

Data shows the reserves of crypto exchanges present in China have been depleted with the rise of decentralized finance. Following a massive bull run on the majority of “farming tokens,” the recent slowdown in price has seen Chinese investors rush to fill their bags with ETH in preparation for the net mega bull run. Colin Wu wrote on Twitter,

“[…]The recent sharp drop in the price of ETH, many users buy bottoms on exchanges and then transfer to DEX for farming. The stock of ETH and other farm cryptos on the exchange is falling frantically.”

According to Wu, these exchanges are being forced to list these DeFi farming tokens to keep the investors on their platforms and prevent the move to DEXs.

The DeFi ecosystem has a total locked value (TVL) of $7.7 billion, falling from an all-time high of $9.5 billion recorded earlier in September, according to DeFi Pulse. The DeFi ecosystem started off the year with a TVL of $674 million, experiencing over 9X growth in the past nine months or so. With Chinese investors getting into the ring, the DeFi space could be set for another soar in the near future.

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Lujan Odera
Lujan Odera
Lujan is a blockchain technology and cryptocurrency author and editor. He has worked in the field of cryptocurrencies and blockchain technology since 2015 helping him gain enough experience to be the writer he is today. He is known for his simple writing style that allows novices to understand the field in the simplest way.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

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