DeFi and May’s Bloodbath (Part II)

Token launchpads

Launching an IDO (Initial Dex Offering) has become the new ICO; issuers can list their tokens on several DEXs simultaneously and utilize these DEXs’ credibility. Token launchpads and IDOs remain popular even during this stress test.

A few big IDO hosts to name are DuckDAO (Ethereum, BSC, Polkadot), DAO Pad by DAO Maker (Ethereum), BSCPad (BSC), LaunchZone PadX (BSC), Polkastarter (Polkadot) and Raydium (Solana). Below are some ambitious projects launched on these platforms in May:

In general, the market slump didn’t hinder fundraising activities on token launchpads. Investors also have to hold a fixed amount of the launchpad’s native tokens in order to participate in the IDOs, which increases the demand for such tokens and their prices in the short term accordingly.

 

The Charm of BSC

Binance Smart Chain was first introduced in September 2019. Within its brief nine-month existence, this network has proved to be one tough competitor of Ethereum. High gas fees and constant congestion on the Ethereum blockchain are the main reasons behind BSC’s attractiveness.

Up until the disaster in mid-May, the crypto industry had delivered a dazzling performance. Retail investors flocked to crypto and DeFi, causing exorbitant gas fees on Ethereum. A record of $69.92 per one transaction was established after Ethereum price surpassed $4,000 on May 12.

DEXs on BSC are obviously the best alternative solution. Decentralized exchanges built on BSC outperformed their Ethereum rivals on all three metrics: trading volume, number of transactions and number of users.

Trading volume of DEXs on BSC and Ethereum

Number of transactions

Number of DEXs users

Source: DeBank

The number of BSC unique addresses has been constantly on the rise since January. The increment from January is a whopping 11,562.6%. The gloomy events on May 19 and May 23 only affected the daily increase; BSC unique addresses still saw an increase of 10.7% from May 01 to May 31. BNB (BSC’s native utility token) price consequently hit several new all-time highs before following the downturn trend of the crash.

BSC unique addresses over time

BSC unique addresses in May

Source: BSCScan

Total Value Locked (TVL) is one of the most significant metrics for DeFi growth. The figure calculated by The Block demonstrates the value in US Dollar of all BNB and other BEP-20 tokens locked in the smart contracts of projects on BSC.

Inherently, TVL is heavily reliant on the price of BNB and therefore reflects the double-digit decline of BNB on May 29. The other dip on May 23 also mirrored the overnight crash that knocked another $500B off of the global market capitalization’s all-time high.

Source: The Block

The overall crypto market cap topped $2.5 trillion on May 12.

Source: CoinGecko

 

Conclusion

DeFi was given one of the most difficult price and liquidity tests in its history, and has demonstrated a great resilience so far. The whole sector should remain cautious as TVL seems to flatten out, which represents a decreasing liquidity and possible unsettling user experience. Yet positive signals in the BSC ecosystem suggest that we should stay focused because this time, BSC may be the dominant force that propels DeFi to new heights.

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