Blockchain analysis carried out by a Nansen researcher has revealed outflows of Ether (ETH) and stablecoins from centralized exchanges following the FTX collapse.
Nansen research analyst, Sandra Leow, posted a thread on Twitter breaking down the current state of decentralized finance (DeFi), with a specific focus on the movement of ETH and stablecoins from exchanges.
Nowadays, the Ethereum 2.0 escrow contract contains more than 15 million ETH, while some 4 million Wrapped ETH is held in the WETH escrow contract. Web3 infrastructure development and investment company Jump Trading owns over 2 million ETH tokens and is the third largest ETH holder in the ecosystem.
The current state of DeFi in @nansen_ai charts
— sandra lmeow (@sandraaleow) November 22, 2022
The current state of DeFi on the charts by @nansen_ai
Binance, Kraken, Bitfinex, and Gemini wallets all make the list of the largest ETH balances, while Arbitrum’s Layer 2 folding bridge also holds a significant amount of Ether.
As Leow explained in correspondence with Cointelegraph, the increasing percentage of ETH held in smart contracts can be seen as an indicator of ETH flowing into various DeFi products. This includes decentralized exchanges, staking contracts, and custody services.
The recent FTX crash may have also sparked fears among users holding assets with third-party custodians such as centralized exchanges.. Leow highlighted the reality that the safety of funds held on exchanges may not be guaranteed:
“There’s an amplification to the quote, ‘If it’s not your keys, it’s not your coins,’ and this is especially important at times like these.”
According to Nansen’s exchange flow dashboard, Jump Trading stands out as an entity with significant withdrawal volumes from exchanges compared to its deposits. Leow laid out a number of possible reasons for Jump Trading’s token movements, noting the company’s exposure to Serum liquidity center (SRM) tokens:
“Due to their exposure to the fallout from FTX, they had to offload some tokens from exchanges that needed liquidity. Over the past 7D, we have seen Jump Trading delist ETH, BUSD, USDC, USDT, SNX, HFT, CHZ, CVX, and various other tokens from multiple exchanges.”
A substantial amount of ETH has also flown out of various major exchanges in the last seven days. $829 million ETH flowed out of Gemini, while Upbit saw $797 million ETH moved out of its account. $597 million of ETH left Coinbase, while Bitfinex also saw $542 million worth of ETH removed from its platform.
A significant amount of stablecoins were also withdrawn from exchanges last week. $294 million worth of stablecoins left Gemini, while Bitfinex saw $173 million removed from its platform. KuCoin and Coinbase followed, with $138 million and $108 million of stablecoins withdrawn from the two exchanges respectively.
Leow also explained the stablecoin movement, telling Cointelegraph that exits often indicate that users are on the sidelines and that capital is not flowing into the cryptocurrency space:
“Perhaps market contagion and the prolonged bear market reduce traders’ appetite to invest and become actively involved in the space.”
Nansen has played its role in delivering key information on major ecosystem events in 2022. The blockchain analytics firm delved into on-chain data to reconstruct Terra’s May 2022 collapse.
He then followed suit with a deep dive into the FTX crash, with evidence suggesting collusion between the exchange and cryptocurrency trading firm Alameda Research. Both firms were created and controlled by Sam Bankman-Fried.
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