In the weekly review On-Chain of Bitfinex Alpha, the company notes that the impact of the FTX shutdown also reached decentralized finance (DeFi) which it categorized as a positive effect since it encourages what is known as HODling and also considers that this situation refers directly to the well-known phrase of Andreas Antonopoulos “Your keys, your Bitcoin. It’s not your keys, it’s not your Bitcoin.”
One of the immediate effects that the FTX bankruptcy has had within the cryptographic industry is the withdrawal of digital assets by investors from centralized exchanges (CEX)because it is hidden from no one that distrust and uncertainty about what may or may not happen has enveloped the industry.
Nevertheless, DeFi protocols have benefited from this as well as decentralized exchanges (DEXs), showing a noticeable increase in users and transactions. While centralized exchanges find themselves experiencing the opposite.
In the analysis, Bitfinex Alpha relied on data provided by Nansen to show that in the case of DeFi protocols, user numbers have climbed by as much as double figures and three protocols acquired more than $1 million each in the past week.
“Protocol earnings are the protocol revenue or fees generated for token holders minus the USD value of tokens distributed to incentivize users.” explained Bitfinex Alpha.
By November 16, among the protocols that received the most money, in first place is the Ethereum blockchain with more than USD 8.5 million, in second place OpenSea with USD 1.5 million and nine more DeFi protocols and systems that provided more than USD 100,000.
According to the Token Terminal data shown in the Bitfinex Alpha analysis, Decentralized exchanges’ daily trading volume peaked after the collapse of LUNA and UST in May of this year.
In a situation where a basket of decentralized exchange tokens is positioned against a basket of centralized exchange tokens and with price fluctuations in mind against Bitcoin, the basket of decentralized exchanges returned 24%, while the basket of decentralized exchanges centralized exchanges declined 2%.
The percentages obtained were with the following tokens, the DEX with: GMX, UNI (UniSwap), CAKE (PancakeSwap), BAL (Balancer), SUSH (SushiSwap), DYDX. And the CEX with: MXU (MEXC), BNB (Binance), GT (Gate.io), (FTX), HT (Huobi), OKB (OKEX), CRO (Crypto.com), KCS (KuCoin).
On the same date, November 16, Gemini recorded net outflows of $495 million, which was the highest amount among exchanges.
“The rush of withdrawals occurred when Gemini halted withdrawals from its yield-generating Gemini Earn program. The lending unit of Genesis Global Trading, which powered the program for Gemini, announced it was suspending client repayments citing “extreme market dislocation” and “loss of industry confidence caused by the FTX implosion,” it explained. Bitfinex Alpha in its weekly On-Chain analysis.
Bitfinex Alpha under Arkham Intelligence data reported that lCrypto balances in Gemini wallets dropped from $2.2 billion to $1.7 billion in a matter of 24 hours. Similarly, he clarified that “Arkham and Nansen do not cover data from the Bitcoin blockchain and may not include all Gemini wallets.”
Likewise, an unfavorable situation was the one he faced crypto.com after I mistakenly sent him to gate.ioits biggest competition, 320,000 ETH, thus wrapping the exchange in “FUD (Fear, Uncertainty and Doubt)” since, it was a situation that after making itself known had the immediate effect that the retail users of Crypto.com, abruptly withdrew their funds.
Although Kris Marszalek, CEO of Crytpo.com assured that “business was normal on the exchange” the users proceeded to make the withdrawals in the same way. Etherscan even reported that one of the ETH public wallets of crypto.com made approximately 90,000 transactions on November 13.
As mentioned at the beginning of the article, those who are in a favorable situation after the collapse of FTX are DeFi protocols and decentralized platforms with a high activity record.. “Despite unprecedented high outflows from centralized exchanges amid the FTX contagion, the resilience of DeFi users is remarkable.” Bitfinex synthesized.
“Your keys, your Bitcoin. It’s not your keys, it’s not your Bitcoin”
The well-known phrase by Andreas Antonopoulos took the first lines of this week’s Bitfinex Alpha analysis because it was a phrase that gained strength as a result of the FTX bankruptcy and a sample of this has been the large number of withdrawals that are being registered from the different exchanges of the crypto industry.
In this case, Bitfinex Alpha echoed the data collected by Glassnode indicating how Bitcoin balances have fallen on different exchanges, reaching 72.9 BTC in seven days.. What generates seeing the past to the situations in which Bitcoin was involved in April 2020, November 2020 and the period between June and July of the current year.
Ethereum is also going through the same path, it registered an output of 1.01 million ETH by its investors regarding the exchanges in the past seven days. Which then positions it at a drop in the most significant balance in the last month since the big loss in September 2020.
In relation to the analysis, the withdrawal of funds from exchanges is a common behavior because investors usually move them to self-custody, an element that is also frequent but with which investors must be careful and first learn to do it with small amounts to thus proceed to large quantities in case errors occur.
Interest in self-custody has returned to the game and presents high demands for use, this was reflected in the increase in a week of the Trust Wallet token by 113%, taking it to its all-time high of USD 2.48 on the 14th of this month. This was due to posts by Changpeng Zhao (CZ), Binance CEO regarding self-custody in which they mentioned Trust Wallet.
On the other hand, regarding the supply of digital currencies, Bitfinex expressed that “While the supply of BTC and ETH has decreased on exchanges, the supply of stablecoins has increased, with more than $1.04 billion coming from USDT, USDC, BUSD, and DAI. This makes it the seventh largest daily aggregate net inflow of stablecoins in history. The data suggests that investors seem to favor protecting their BTC and ETH assets over centrally issued stablecoins in this volatile market.”
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