The Defi craze of 2020 has continued this year as well, the total value locked in various Defi protocols breached $45 billion for the first time. At present, the volume of defi tokens on centralized exchanges compared to its total supply is below 10% for the likes of $UMA, $MKR, $COMP, $UNI, and $SNX. While a few including $AAVE and $BAT has over 15% of its supply on centralized exchanges which is considered bearish for a defi token.
Source: CryptoQuantThe ratio of exchange volume of these tokens compared to total supply suggest how much the token is being used for various purposes such as staking, institutional buying, and DEX user. A percentage below 5 is considered healthy for a defi token. As per the current volumes $UMA, $MKR, and $COMP look bullish while $BAT with over 15% exchange supply looks bearish.
Centralized exchanges’ holdings / total circulating supply =
Under 10%$UMA: 2.7%$MKR: 3%$COMP: 4%$UNI: 7%$SNX: 7.5%
10-15%$LINK: 12.7%$SUSHI: 12.7%$BTC: 12.7%$YFI: 13%
Over 15%$AAVE: 17%$ETH: 17.5%$BAT: 19.5%
— Ki Young Ju 주기영 (@ki_young_ju) March 18, 2021
For $MKR, exchange holdings are decreasing, and fewer tokens on exchanges compared to the total supply. For $BAT, exchange holdings are increasing meaning holders are transferring it for selling on centralized exchanges.
The Changing Defi Dynamics
The Defi ecosystem works on top of the Ethereum network primarily dealing in ERC-20 tokens or any other Ethereum based token protocol. However, during this bull season the growing demand for ETH and rising popularity of Defi has made the Ethereum network quite …
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