Silicon Valley Bank Implosion Whips Up DeFi Transaction Frenzy As Crypto Assets Come Back: DappRadar

by Arthur · March 18, 2023

Silicon Valley Bank’s (SVB) high-profile implosion last week whipped up a frenzy of decentralized finance (DeFi) transactions, according to market intelligence platform DappRadar.

DappRadar notes in a new report that DeFi tends to be highly vulnerable to market problems and crashes.

Last weekend, USD Coin (USDC) lost its peg to the US dollar following the news that Circle, the stablecoin issuer, had $3.3 billion of its $40 billion in reserves locked up in the collapsed SVB. The second-largest stablecoin by market capitalization fell as low as $0.8788 before regaining its peg on Monday.

This roller coaster had a ripple effect on the DeFi sector, explains DappRadar.

“On March 11th, after the SVB crash and USDC depegging, the DeFi market experienced a significant drop in TVL, falling by 9.6% from $79.28 billion to $71.61 billion. The news created panic among investors, which led to a significant sell-off and a decline in TVL.

Fortunately, on Monday the 13th, USDC reserve deposits held at Silicon Valley Bank were fully accessible to the public, helping to stabilize the market. This announcement led to a 13% increase in DeFi TVL, reaching $81.15 billion.

TVL stands for “total value locked”, which represents the total capital held within a blockchain’s smart contracts. TVL is calculated by multiplying the amount of collateral locked into the network by the current value of the assets.

DappRadar notes that the number of unique active wallets interacting with DeFi contracts rose from 421,026 on March 8 to 477,094 on March 11, a 13% increase. The number of transactions increased by 23% from 1,356,483 to 1,668,992.