A few days before the much-anticipated “Merge,” the overall value of Ethereum fell due to a steady reduction in the quantity of liquidity flowing into decentralized finance (DeFi).
Ethereum has been the blockchain of choice for thousands of developers and millions of dApp users since a group of entrepreneurs and Ethereum engineers popularized the term “decentralized finance” in 2018.
The general gloomy market that followed the new milestones established earlier in 2021 has continued into the third quarter. Ethereum, as the leader of the DeFi industry, was unfortunately not spared, as the chain lost 7% of its opening day value.
According to DeFiLlama statistics, Ethereum TVL decreased from $37.32 billion on August 1 to $34.36 billion on the final day of the month.
After hitting new heights in 2021, Ethereum made many efforts to emancipate itself from bears in January 2022, when it achieved an annual top of $100.99 billion.
By the end of August, TVL was more than two times below this figure. Simply told, Ethereum has lost $66.6 billion over the last eight months.
Similar to other smart contract chains such as Solana, TRON, Binance Smart Chain, Avalanche, and Fantom, Ethereum’s total locked value is decided mostly by the performance of decentralized apps contained inside its ecosystem.
MakerDAO, the largest decentralized application (dApp) on Ethereum, lost 5.21 percent of its value, or approximately $8 billion. The value of Lido, a liquid staking protocol with more than $6 billion locked, decreased by 1.8%. Not even decentralized exchanges (DEX) like Uniswap and Curve Finance were exempt.
Uniswap, the biggest DEX by trading volume posted less than $40 billion in volume for the second consecutive month hitting roughly $39 million in August.
Dune Analytics data revealed that over the same time frame, Curve Finance recorded a volume low of around $6 billion.
AAVE, one of the most popular decentralized applications, decreased by 2% to approximately $4.6 billion, while yield protocol Convex Finance and lending platform Compound fell by 4% and 8.32%, respectively.
Balancer and Frax were the only positives, as they increased their respective value locked by more than 9 percent.