The failure of one of the most ambitious decentralized finance projects reduced the sector’s overall worth by more than $83 billion as investors fled to safer havens.
In the first half of May, the price of the stablecoin TerraUSD, or UST, and its sister token Luna plummeted, sending shockwaves across the DeFi sector, where investors borrow, lend, and wager in cryptocurrencies without the need for intermediaries like banks.
The total value of stablecoins has fallen to $112 billion.
The decline of TerraUSD has wreaked havoc on cryptocurrencies, with Bitcoin and Ethereum-the two most popular tokens-falling below critical support levels in early May and struggling to break higher since then, while the Bloomberg Digital Coin Index plunged by 30%.
DeFi ventures encourage investors to acquire their tokens and deposit them to order transactions on the underlying blockchain, a process known as staking, in exchange for higher returns than standard financial products.
MakerDAO, the largest DeFi project by total value, has seen its total locked value drop by nearly a third in the last month to $9.8 billion, while Curve, a popular stablecoin trade platform, has seen its total locked value drop by more than 55% to $9 billion.