DeFi market fell off the cliff in Q2, but there’s hope

Welcome to Finance Redefined, your weekly dose of key decentralized finance (DeFi) insights, a newsletter crafted to bring you some of the major developments over the last week.

This past week, the DeFi ecosystem saw several new developments despite a bearish phase brought on by the lending crisis in the crypto market. Another crypto lender, Celsius, with high stakes in DeFi protocols, filed for bankruptcy. The overall DeFi market fell to new lows in the second quarter. However, a new report indicates users haven’t given up hope.

BNB Chain launched a new decentralized application (DApp) platform with an alarm feature. Vermont state regulator opened an investigation into troubled crypto lender Celsius, deeming it deeply insolvent. A DeFi researcher has predicted that Ethereum proof-of-stake (PoS) can help Ether (ETH) overtake Bitcoin (BTC).

The DeFi tokens saw a new flow of bullish momentum over the past couple of days owing to a market-wide green momentum after the inflation data release.

DeFi market fell off cliff in Q2, but users haven’t given up hope: Report

Despite the DeFi market suffering a 74.6% market cap decline in Q2, user activity has remained relatively resilient, says CoinGecko.

In a report published by the crypto data aggregator on Wednesday, CoinGecko reported that the overall DeFi market cap fell from $142 million to $36 million over the second quarter, due mainly to the collapse of Terra and its stablecoin TerraUSD Classic (USTC) in May.

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BNB Chain launches DApp platform with ‘Red Alarm’ to warn users about scams

BNB Chain has launched a new platform, DappBay, to discover new Web3 projects. DappBay is equipped with a novel feature called Red Alarm, which assesses project risk levels in real-time and alerts users of potentially risky DApps, according to a Thursday announcement.

Red Alarm is a contract risk scanning tool offered by DappBay that helps users identify high-risk projects to protect their investments from rug pulls and scams. Users can check if a contract address has logical flaws or fraud risks by entering it into the Red Alarm feature.

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Vermont becomes the sixth US state to launch investigation against Celsius

Vermont’s Department of Financial Regulation (DFR) issued a warning against troubled crypto lending firm Celsius on Tuesday, reminding users that the crypto lending firm is not licensed to offer its services in the state.

The DFR alleged that Celsius is “deeply insolvent” and doesn’t possess “assets and liquidity” to fulfill its obligations toward the customers. The state regulator accused the crypto lender of mismanaging customers’ funds by allocating them toward risky and illiquid investments.

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PoS gives Ethereum the economic structure to overtake Bitcoin, says DeFi researcher

As Ethereum shifts into PoS, a DeFi researcher has argued that the platform can overtake Bitcoin’s throne as the top dog in crypto.

In a Twitter thread, researcher Vivek Raman highlighted that the upcoming Ethereum Merge could create a better economic structure for the smart contract platform. According to Raman, the shift into PoS lowers Ether inflation, gives better security and positions the crypto as a digital bond.

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DeFi market overview

Analytical data reveals that DeFi’s total value locked registered a minor dip from the past week, falling to a value of $56.45 billion. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top-100 tokens by market capitalization had a mixed week, with several tokens trading in red while a few others registered even double-digit gains.

Aave (AAVE) was the biggest gainer among the top 100 with a 30% rise over the past week, followed by Uniswap (UNI) with a 23% surge. Compound (COMP) registered a 19% surge over the past week, while Curve DAO Token (CRV) also saw a 15% rise in price over the past seven days.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education in this dynamically advancing space.