Ethereum DeFi Assets Hit Hard by Major Price Correction

Following a period of rampant speculative activity, decentralized finance (DeFi) assets now appear to be suffering from a major correction.

Though average cryptocurrency has lost 2.9% in the last week, DeFi assets have been hit harder than most in this time. The top 10 DeFi assets have an average loss of 23.4% over the last week. Scaling further back, these DeFi assets have performed even worse, having lost an average of 27.44% in the last 30 days.

Yearn Finance (YFI) is currently the worst performer over the 7-day timeframe, having lost 36.93% of its value in this time to reach its current price of $14,525. UMA, on the other hand, is the worst performer on the 30-day chart, having lost 58.7% in this time to reach $6.04—its lowest value since August.

However, while the DeFi bubble is bursting—these coins are still up since the start of the year, largely because most of the coins are so young. All but two top 10 DeFi assets are up significantly against the US dollar (USD) when measured year-to-date, with Aave (LEND) currently leading the pack with its 2,252% gains while Yearn Finance isn't far behind with 1,271% gains this year.

Following a period of strong speculative activity, cryptocurrencies often experience either temporary, long-term, or permanent corrections, which see their value drop considerably due to sudden ship in the dynamics of supply and demand. As the data shows, newer, less battle-tested assets like Yearn Finance, UMA and Uniswap (UNI) may be less resistant to these sudden sell-offs—potentially because they haven't yet developed sufficient order book depth, while more established assets like Maker (MKR) and Kyber Network (KNC) have held up relatively well.