Hayden Adams, founder of Uniswap, has noted that large sell-offs are now simply serving as a reminder and perhaps evidence that DeFi is built different. Hayden confirmed that the decentralized finance protocol Uniswap did close to $9 billion in trading volume during the recent crypto market flash crash. This level of activity is far above normal levels yet there was hardly any stress or downtime.
As widely reported, this Bitcoin and crypto market crash appears to have been due to US President Donald Trump announcing 130% tariffs on China, which might become effective from November 1st. Unsurprisingly, the markets appear to have shown a strong reaction to this seemingly negative news update. Stock markets also fell sharply following the announcement that Trump made first via Truth Social.
Despite the huge sell-off in crypto, various DeFi protocols have reported that they operated flawlessly. Aave, for example, experienced the largest-ever stress test of its $75 billion+ lending infrastructure. Responding the increased activity, the protocol is said to have automatically liquidated a record $180 million worth of collateral during a span of just 1 hour, all without any human intervention.
Meanwhile, things were apparently not that smooth over at centralized crypto exchange Binance. The digital assets platform’s management acknowledged that many consumers had complained about performance issues when accessing Binance. However, the company’s CEO Richard Teng stated that they would be addressing user complaints as thoroughly and promptly as possible, and even promised to compensate certain users who may have had a bad or unsatisfactory experience.
Events like these, where liquidations were around $20 billion within a 24-hour timeframe saw the Bitcoin price crash from around $120K to as low as $105K within a very short timespan. This latest liquidation event is actually the largest ever in crypto. The COVID crash of 2020 only liquidated around $1.2 billion while the FTX collapse-led crash liquidated about $2 billion. But the current market is also valued a lot higher than during those earlier events.
It’s the black swan events like the one just experienced that really showcase the resilience or lack thereof of the crypto and web3 space. Many altcoins were hit very hard. Dogecoin, for instance, dropped as low as $0.09 from around $0.21. Although prices have recovered, the space has really been jolted. Many investors became anxious with BlackRock reporting that its clients sold off large amounts of Ethereum ETFs following Trump’s announcement.
