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Bankless: Extrapolate future crypto trends from these 5 soaring DeFi indicators after the FTX crash

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Together, check out the DeFi indicators that have been rising since the FTX imploded, and extrapolate what these trends mean for cryptocurrencies and your strategy going forward.

Original source: Jack Inabinet, Bankless

The DeFi way

This week, we'll look at the DeFi indicators that have been rising since the FTX imploded, and extrapolate what these trends mean for cryptocurrencies and your strategy going forward.

The five DeFi indicators surged after the FTX crash

Where is the capital going in the post-FTX world? What projects have benefited from the FTX crash? Can there be light in the depths of crypto doom and gloom? Let's find out.

01 CEX outflows

Rule #1: Not your keys and not your cryptocurrency!

It's amazing how many people end up learning the value of this core encryption principle after a major disaster. Too bad, there are no readily available Ledger Nano sales, but it's definitely on the rise!

Since Nov. 4, the exchange has seen a net outflow of $4.675 billion and an 11.4% decrease in the balance of the exchange stablecoin.

Source:Nansen

In addition, net ETH outflows from the exchange totalled US $5.125 billion during the same period, representing 13.1% of the total ETH previously held by CEXs.

Source:Nansen

Since November 4, $9.8 billion of stablecoins and Ethereum have been withdrawn from CEXs. And with respect to Binance bankruptcyIs widespread concern on CT, and the withdrawal trend is unlikely to reverse anytime soon.

Today's state-of-the-art auditing solutions do little to reassure users about the security of their assets on CEXs:

Reserve proof audit only captures at one point in time asset users are unaware of liabilities and balances are not updated in real time The quality of cryptocurrency exchange auditors has been called into question Complex crypto operations appear to be shifting to smaller firms that may lack the resources to thoroughly audit companies

Reversing capital flight will require exchanges to regain the trust of their customers, which could be a tall order at a time when cryptocurrency market participants are (rightfully) more suspicious of centralized custodians than ever before.

02 GMX TVL

Just because the FTX collapsed doesn't mean the cryptocurrency's thirst for leverage has been sated: GMX has been the main beneficiary of CEX outflows from DeFi users looking for an untrusted trading experience.

GMX offers users up to 30x leverage, much higher than many DeFi protocols.

Few mature encryption projects today have a higher total value lock (TVL) than they did in early November. GMX's dollar-denominated TVL is up 9.9 percent from Nov. 5.

Source of Information:DeFi Llama

When denominated in ETH, GMX's TVL is up 41.0% since 11/5!

Source of Information:DeFi Llama

The chaos and string of bankruptcies that followed the FTX fiasco wiped out the value of the entire cryptocurrency ecosystem. Because of this, looking at TVL in ETH can more accurately represent the growth of a given protocol's cryptocurrency market share.

For example, GMX's dollar-denominated TVL fell 25.3% from November 5 to 10, while its ETH denominated TVL rose 12.1%!

The temporary decline in GMX's US dollar-denominated TVL is a direct result of systemic necessity (i.e. a risk not unique to the Agreement). The increase in ETH denominated TVL indicates that a greater proportion of crypto assets entered the platform during this period, thus increasing market share.

Currently, GMX TVL is in growth for both the dollar and Ethereum, indicating that the platform has become the top choice for traders looking for a decentralized alternative to a centralized exchange.

03 Arbitrum TVL

GMX accounts for more than half of Arbitrum TVL. Given this framework, it's no surprise that Arbitrum's TVL is up in the wake of the FTX event.

Source of Information:DeFi Llama

Shockingly, Arbitrum's TVL (excluding GMX) is up 7.6 per cent from its pre-FTX high on November 5.

Source of Information:DeFi Llama(Data download)

Why is this shocking?

Because the recovery of Layer 2 TVL is not looking good compared to Arbirtum: dollar-denominated L2 TVL is 16.6% below its Nov. 5 high.

Source of Information:L2Beat

The high fee income from GLP promoted the Arbitrum ecosystem and promoted TVL. The yield generated by the asset's fee structure is the economic backbone of the blockchain network.

Arbitrum developers rely on high GLP revenue!

Umami Finance, for example, is tryinglaunchA vault that can hedge GLP price risk while continuing to provide users with associated high returns. GLP's higher yields make the vault, as well as the dApp, more attractive to DeFi users. While GMX yields are attractive, projects at Arbitrum benefit from deeper liquidity and higher valuations.

TVL for Leveraged Farming

Sentiment and Gearbox, respectively, in October 21,And & have spentAvailable on 23rd, seems ready to prove that this bear market is a building market!

Both of these protocols allow users to reap the rich benefits of whitelist DeFi protocols with undercollateralized leverage (for more information on these protocols, see The ultimate guide to undersecured loans in DeFi-- The DeFi method has been compiled,Click to see).

The launch of these deals, and Gearbox in particular, was a positive catalyst for the industry's TVL, which grew 952% from $11.4 million on October 23 to $119.9 million on November 5!

Source of Information:DeFi Llama

Unfortunately, the collapse of FTX severely hampered the rapid growth of TVL in leveraged mining and resulted in a 20.3% peak-to-trough reduction in TVL observed in this sector. While the sector had not yet reached the Nov. 6 ATH value at the time of analysis, the gap in the sector was within 1% as of Dec. 13, with TVL of $118.9 million.

High TVL in the leveraged mining sector may not be sustainable in the long term. Gearbox accounts for 94% of the industry's TVL and heavily subsidizes its yield.

Source of Information:Gearbox

The agreement rewards lenders with GEAR rewards of up to 6.66% annual interest rate (APY) in selected pools of funds to incentivise deposits.

But diluting holders through token incentives is not a viable long-term strategy. While acquiring new users is critical to the success of the agreement, failure to retain existing users weakens the agreement's community and may jeopardize the future of the project.

Capital is already flowing into leveraged mining, especially as Gearbox is a shiny new toy with token incentives. Unwinding these projects could lead to a reduction of TVL in this area.

05 Polygon NFTs

Speaking of collectible values, Starbucks just launched its blockchain-based loyalty program and NFT community Odyssey to its Beta testers.

The same goes for Redditooors. Since November 5th, the unique Reddit Collectible The number of Avatar owners has increased by 50 percent. (Note, Reddit Collectible Avatar is Reddit. NFT series based on Polygon network.)

Source of Information:Dune Analytics

Polygon's expansion into the branded collectibles market has been surprisingly successful amid declining user numbers and declining levels of on-chain activity. The casting, transfer, and sale of these low-value collectibles stalled the rest of the NFT activity on Polygon.

On December 12th, over 84,000 returning users purchased Polygon NFT on OpenSea, an increase of over 630% since November 5th!

Source of Information:Nansen

In addition, the number of weekly OpenSea users and NFT minters increased by 178% compared to the week ending November 7: nearly 245,000 Polygon addresses performed one of these operations in the past week.

Source of Information:Nansen

While these NFT projects masquerade as "collectibles" in an attempt to separate themselves from the Toxic Culture of cryptocurrencies, their success still demonstrates the viability of NFT and encourages companies to adopt and integrate blockchain technology in their business models and loyalty programs.

Keep at it...

In fact, things are pretty bad right now.

Almost everything fell apart after the 3AC explosion. After the Fed raised rates and COVID became severe, almost everything went down...

While the numbers on the screen rise and fall, the primitives that cryptocurrencies are building will remain. We are building for the future we want. Generate alpha and prepare for the next narrative.

Will self-hosting, DeFi, innovative fee structures and branded communities reduce costs? How does yield intersect with the growth of cryptocurrencies? Stay and have a look.