A DappRadar executive has said that an extended bear market could have a strong impact on the survival of decentralized finance (DeFi) apps. The executive claims that 80% of DeFi apps could perish if the bear market persists for a year.
DApp data platform DappRadar said that 80% of DApps in the DeFi space could disappear if the bear market continues for an extended period of time. Putting that time frame at one year, an executive at the platform said that the bear market has been particularly impactful on the DeFi space.
The DeFi market’s total locked-in value has dropped from roughly $237 billion to just under $200 billion alongside the market crash. Decentralized finance apps like Aave and MakerDAO have been experiencing particularly difficult times lately, with both assets heavy drops in TVL as well.
Pedro Herrera, a senior data analyst at tracker DappRadar, said of a crypto winter for DApps,
“As far as crypto winter, DeFi dapps have never gone through it. They have experienced crashes, but this feels like a prologued one. Probably 20% of the apps that hold 80% of the industry value will survive. And we could see protocols that are not widely used fade away.”
The market crash had a knock-on effect in the DeFi space. As assets have fallen in price, loans have been liquidated, affecting assets on the general market. At a time like this, the desire to interact with DeFi protocols has dropped.
What will 2022 be like for DeFi?
Every sector in the crypto space is having a rough time. The general market is down, DeFi is seeing lower numbers on several metrics, and the division NFT sector has been subject to hacks lately. Still, proponents are unfazed, as previous market crashes have hardened them to such incidents.
DeFi, however, has been a major development in the past few years, with many calling it the future of finance. A long market lull will undoubtedly affect many projects, but the few that survive could do well.
The idea of decentralized finance is significant enough that those outside the space have begun to take note — including regulators. Should they manage to survive and endure whatever regulation comes their way, they could come out of 2022 better. This will depend on their usage numbers and new features, but the crypto community still has a lot of interest in it, even if it is currently going through a tough time.
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