TVL in DeFi is down 41% in the last 7 days
Total value locked in key lending protocols is dropping as investors started flipping tokens to stablecoins with the intention of cashing out to fiat. Key lending protocols on several networks are seeing their TVL figures slashed while lending dapps on Terra see their TVL diminish by more than 99% amidst the biggest wealth drain in crypto history.
There are two main reasons for investors to consider crypto-related lending. First, investors can put up their cryptocurrency holdings as collateral to take out a cash loan. This way, investors can release liquidity without having to completely cash out their holdings. The other reason for collateralizing crypto assets is for short selling.
Short sellers collateralize their cryptocurrencies to effectively place a bet that the price of a crypto asset will fall. When the open short position is closed, the investor who placed the bet will receive either cash or an additional sum of…
