Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Public money, private plans: MPs demand Post Office transparency

      13 June 2025

      Coal to cash: South Africa gets major boost for energy shift

      13 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      10 red flags for Apple investors

      13 June 2025
    • World

      Yahoo tries to make its mail service relevant again

      13 June 2025

      Qualcomm shows off new chip for AI smart glasses

      11 June 2025

      Trump tariffs to dim 2025 smartphone shipments

      4 June 2025

      Shrimp Jesus and the AI ad invasion

      4 June 2025

      Apple slams EU rules as ‘flawed and costly’ in major legal pushback

      2 June 2025
    • In-depth

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025

      South Africa unveils big state digital reform programme

      12 May 2025

      Is this the end of Google Search as we know it?

      12 May 2025
    • TCS

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025

      TCS | Sentiv, and the story behind the buyout of Altron Nexus

      3 June 2025

      TCS | Signal restored: Unpacking the Blue Label and Cell C turnaround

      28 May 2025
    • Opinion

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025

      Digital giants boost South African news media – and get blamed for it

      29 May 2025

      Solar panic? The truth about SSEG, fines and municipal rules

      14 April 2025

      Data protection must be crypto industry’s top priority

      9 April 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Cryptocurrencies » Crypto lenders face a DeFi drubbing

    Crypto lenders face a DeFi drubbing

    By Agency Staff21 June 2022
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    Crypto lending may not be down and out, but it’s certainly on the ropes.

    Crypto lenders have boomed over the past two years, attracting tens of billions of dollars in bitcoin, ether and other coins which they in turn lent out or invested, often in decentralised finance (DeFi) projects with sky-high returns.

    But as crypto markets tumble, DeFi activity is being hit particularly hard, robbing lenders of their most lucrative returns and threatening to squeeze the whole sector — reaching far beyond Celsius Network, which grabbed the headlines last week when it froze withdrawals and transfers.

    Versus the dollar, bitcoin has fallen 34% so far in June, while ether has lost over 40%

    The total value locked (TVL) on ethereum, a metric that attempts to track the value of tokens deposited in a variety of DeFi protocols, has declined by US$124-billion or 60% over the last six weeks, according to data provider Glassnode.

    The crash has occurred in two large crypto slices, $94-billion lost during the collapse of the Luna project — involving failed stablecoin TerraUSD — and another $30-billion in mid-June, said Glassnode, which attributed the falls to diminishing risk appetite.

    “The current market conditions have put an enormous amount of pressure on operators that interact with decentralised finance protocols to generate their yield,” said Mauricio Di Bartolomeo, co-founder and chief strategy officer of crypto lender Ledn.

    Similarly, an index tracking crypto tokens linked to DeFi lending/borrowing protocols and exchanges, from research firm Macrohive, plunged 35% last week as investors pulled money from the formerly high-flying sector.

    Lower returns

    Some DeFi protocols, or projects, are starting to offer lower returns, with average lending and borrowing rates at one platform, Compound, down on the week across all but one cryptocurrency, the stablecoin Pax Dollar, Macrohive found.

    In a further sign of the slowdown, ether — the token that underpins the ethereum network on which many DeFi protocols operate — last week dropped to its lowest level against larger peer bitcoin in 14 months

    Versus the dollar, bitcoin has fallen 34% so far in June, while ether has lost over 40%.

    The turmoil in this higher yielding part of the crypto market raises questions about the sustainability of the high interest rates crypto lenders offer to their customers, often in double digits.

    Some market players say crypto lenders should make clients aware of the risks of projects their money is pumped into.

    “I expect users to demand more transparency if their assets are managed in DeFi space,” said Iakov Levin, CEO of crypto investment platform Midas Investments. “Crypto needs to find a more transparent model of retail yields.”

    New Jersey-based Celsius, with over $11-billion of assets on its platform, cited market volatility when it suspended redemptions last week. A data trawl shows that it was invested in several DeFi projects that ran into difficulties.

    “The DeFi market will no doubt suffer from this development because it also deals with cryptocurrencies and people will be more wary than ever about investing their assets in what they perceive as similar ecosystems,” said Yubo Ruan, founder and CEO of Parallel Finance, a decentralised lending protocol.

    Ruan said if projects “promise rewards that sound too good to be true – there’s always a chance that they are”.  — Medha Singh and Lisa Mattackal, (c) 2022 Reuters



    Bitcoin ether Ethereum
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleRugged PCs bring AI to the edge in industrial settings
    Next Article 5G subscriptions to top one billion in 2022: Ericsson

    Related Posts

    Bitcoin smashes R2-million mark in record-breaking rally

    22 May 2025

    Trump tariffs are now slamming crypto

    7 April 2025

    How stablecoins could unlock trade in South Africa

    1 April 2025
    Company News

    Huawei Watch Fit 4 Series: smarter sensors, sharper design, stronger performance

    13 June 2025

    Change Logic and BankservAfrica set new benchmark with PayShap roll-out

    13 June 2025

    SAPHILA 2025 – transcending with purpose, connection and AI-powered vision

    13 June 2025
    Opinion

    Beyond the box: why IT distribution depends on real partnerships

    2 June 2025

    South Africa’s next crisis? Being offline in an AI-driven world

    2 June 2025

    Digital giants boost South African news media – and get blamed for it

    29 May 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.