Can ‘DeFi Winter’ really wipe out 80% dApps from the market

ambcrypto.com:

The recent lull in cryptocurrency market prices has been felt across all sectors in the industry, but decentralized finance might be in for an especially harrowing time, according to experts at DApp Radar.

All major cryptocurrencies including Bitcoin and Ethereum witnessed double-digit losses over the past week, and experts fear that a bear market has now set in. However, many projects belonging to the “future of finance” or DeFi have suffered even worse fates.

Top DeFi protocols such as Curve, Aave, and Maker have registered major liquidations recently. These led to the total value locked (TVL) of the whole ecosystem dropping from $237 billion to around $200 billion, along with the market crash. Consecutively, the TVL in most projects has also seen a dip, with Curve losing 14.39% of its locked value.

The persistence of this bear market for a year will open avenues for a DeFi winter to set in. This could see almost 80% of DeFi-related dApps disappear from the market, according to Pedro Herrera, a senior data analyst at tracker DappRadar.

Talking to Bloomberg recently, he said,

“As far as crypto winter, DeFi dapps have never gone through it. They have experienced crashes, but this feels like a prologued one. Probably 20% of the apps that hold 80% of the industry value will survive. And we could see protocols that are not widely used fade away.”

Bloomberg also quoted research by Dune analytics. It sought to explain the reasoning behind DeFi’s fall-out. A fall in token value has caused users to liquidate many of their leveraged positions, with assets worth as much as $300 million liquidated in DeFi protocols last week. It further noted that almost 1,000 positions were liquidated on apps like Aave, Compound, and MakerDAO between