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A turbulent market environment has led to a significant contraction in the DeFi trading volume.

In August, according to data from investment manager VanEck, the decentralized finance (DeFi) landscape retreated to a level of $52.8 billion, a decrease of 15.5%, due to the value loss of the most dominant DeFi tokens.

VanEck’s report also touched upon the pressure on global interest rates in the U.S. and on stablecoins. In August, the total market value of stablecoins declined by 2%, ending the month at $119.5 billion.

The firm links this decline to rising interest rates in traditional finance and sees it as encouraging investors to shift to money market funds that offer approximately 5% return based on risk.

DeFi Decline

The data in the report were taken from VanEck’s MarketVector Decentralized Finance Leaders Index (MVDFLE). This index tracks the performance of the most significant and liquid tokens in the DeFi ecosystem.

Some major tokens like Uniswap (UNI), Lido DAO (LDO), Maker (MKR), Aave (AAVE), THORChain (RUNE), and Curve DAO (CRV) experienced significant declines affecting the overall health of the market, leading the DeFi index to retreat by 21% in August. This decline was further exacerbated by the 33.5% drop of the Uniswap token as many investors chose to sell their tokens to realize profits from the previous month.

On a broader scale, the total value locked (TVL) in the DeFi sector saw a decrease of 8%, moving from $40.8 billion to $37.5 billion, closely following Ethereum (ETH)’s 10% drop in the same period.

In contrast, a few positive indicators emerged in August, including the successful dismissal of a class-action lawsuit against Uniswap Labs, and notable growth in stablecoins, especially with Maker and Curve.

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