Luna’s crash sends a chill through the decentralized financial market
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Traders are moving away from investments linked to decentralized finance, in the latest sign of how the $ 40bn collapse of cryptocurrency luna sent shock waves through a key segment of the digital assets market.
Ether, the second largest crypto token in the world and a proxy for perception on the DeFi market, lost $ 100bn more than a third of its value in the past month. Its fall is far more severe than the 23 percent decline for bitcoin, the oldest and most valuable digital token by market value.
Many crypto advocates consider DeFi to be one of the most promising innovations in the digital asset industry, and projects aim to operate without centralized intermediaries like banks by using automated systems that control the largest stakeholders. However, last month’s luna failure, with its terraUSD stablecoin linked, highlighted the risks of investing in DeFi projects and the potential for catastrophic flaws in the design of the programs that underpin their operations.
“Confidence in the crypto ecosystem and decentralized finances remain at historically low levels” following the collapse of terra and luna, added Sipho Arntzen, an analyst at Swiss private bank Julius Baer. we hope there will be no speedy recovery at the moment ”