The impact of Terra plummeting to $0 has crossed the ecosystem and created a chain reaction that brought down several DeFi networks and applications. Statistics confirm that the total TVL of the DeFi ecosystem lost nearly $100 million, fueled by this event. The current crisis is seen as a blow to the trust investors had in the crypto space.
The inability of TerraUSD to keep the peg is now among the biggest downsides faced by the DeFi ecosystem. DeFi’s TVL has been sliding slowly after reaching a whopping $231 billion on April 3 and has successfully lost more than half of it in the next 42 days. Currently, the value is floating just above $100 million at $112.29 million.
Terra received the biggest blow as its TVL plunged to a mere $500 million from a staggering $30 billion. Before the fall, Terra’s accounted for more than 13% of the $231 billion and was the second-largest TVL in the entire crypto ecosystem. The network is in the 14th position after losing nearly 99%.
Of the remaining $112.9 billion, Ethereum holds $71.09 billion accounting for more than 63%. Surprisingly, users moved in bunches to Ethereum following this event, further increasing the network’s dominance in DeFi. Binance Smart Chain holds the second position with 7.71% of TVL.
The fundamental shift in DeFi’s TVL also pulled Curve down from the top. MakerDAO leads the race for DeFi protocols with 9.40%TVL, which comes up to $10.56 billion. The Curve follows MakerDAO closely behind with $8.76 billion. This fall is significant given Curve held more than $20 billion during the first week of April.
However, this impact is unanimous among DeFi protocols and has brought fundamental changes to the ranking. As per the reports, the 28 protocols had to face severe TVL reduction in the last seven days. Even MakerDAO lost nearly 13.73% from its previous valuation. Curve, Lido, and Aave lost 49.18%, 46.37%, and 21.94%, respectively, last week.
That, however, is not all, as the DeFi application Anchor fell to 58th position from the previously held third position after losing almost 98% of its TVL. The application, as of now, accounts for around $300 million. Moreover, seventeen other DeFi protocols are reported to have lost nearly $1 billion as the Terra event occurred.
Reports suggest that there is still $419 billion in smart contract tokens, and Ethereum is responsible for most of these protocol tokens. Despite leading the market, Ethereum also had to lose around 30% in the market last week. As far as the smart contract protocols are concerned, Terra has been pushed to the back of the line and is currently in the 18th position.
Experts consider this chaotic event to be a dent in the trust in the crypto market. The loss of trust and the $100 billion TVL can only be recovered in the long-term and may take several cycles until that is done.