After reporting tremendous gains during the rally, Ethereum has also succumbed to the correction setting in the crypto market. The second-largest digital asset has lost approximately 26% of its value in September, and this was one of its many problems. According to data provider Santiment, the ERC-20 market cap has ‘flippened’ the ETH market cap.
The Ethereum market cap has been leading the ERC-20 market cap for a long time until the unfateful fall of the crypto market in March. As one can note from the above chart, the ERC-20 and ETH market cap were moving close to each other after the Black Thursday event. However, as the market consolidated again in late June, the ERC-20 market cap took over Ethereum’s, and until the rally in late July, lead the market cap game.
As September once again sees the ETH market consolidate after a steep fall, ERC-20’s market cap has ended up noting an increase in market cap. This has been the highest market cap difference of ERC-20 coins over ETH of all time. However, the growth that drove the ERC-20 market cap was also decentralized finance [DeFi], which also witnessed a drastic hit in the total value locked.
According to data provided by DeFi Pulse, the TVL was at a peak of $9.6 billion on 2 September, but as the sell-off escalated and ETH value dropped, the TVL reached a low of $6.11 billion.
Researchers from Arcane believed that the Sushi Protocol uncertainty affected the entire DeFi ecosystem leading to the TVL collapse by nearly 17%.
Despite the fall, the ERC-20 tokens and the DeFi market were once again on a bullish path. Tokens like LEND, ELF, SNX, and REN were surging due to a spike in address activity which could be an indication of the bullishness in the market. Although DeFi has also been a direct contributor to the rising ETH gas cost, its ecosystem has not yet been impacted but once again highlighted the scalability issues of Ethereum.
Where to Invest?
Subscribe to our newsletter