The Rise of DeFi in China’s Digital Space
Despite a tumultuous sell-off that saw over $2 billion evaporate from the DeFi landscape, interest in decentralized finance is experiencing a notable upswing in China. On September 2, ‘DeFi’ became the hot keyword on WeChat, with searches skyrocketing to an unprecedented 900,000! That’s not just a bump; it’s practically a DeFi tsunami, nearly doubling the previous peak of 500,000.
Exchanges Under Pressure
Fast forward to September 7, and things were looking a bit shaky for local exchanges. Journalist Colin Wu reported that traders were pulling their assets en masse, seeking refuge in DeFi protocols. This mass exodus resulted in several exchanges facing liquidity crises, making them unable to meet withdrawal requests. Wu even shared charts that depicted a concerning trend: Traders who snagged ETH during the dip were rapidly shifting their assets to decentralized exchanges (DEX) to embark on some serious yield farming.
The Coin Withdrawal Campaign
In the midst of the chaos, a grassroots movement emerged dubbed the “coin withdrawal campaign.” On September 6, numerous exchanges experienced significant withdrawal issues, causing many users to make a radical decision: pull all their USDT and crypto, and delete their exchange accounts. It was as if they declared, “If you can’t beat them, just take your coins and leave!”
Crazy Coins and Capital Migration
Wu analyzed the situation and posited that some exchanges were hastily listing those “crazy” DeFi coins as a defensive maneuver. The idea? Keep traders tied to their platforms and prevent capital from migrating to decentralized exchanges. Meanwhile, local investors were not sitting idle; they were pooling funds to establish a “farming fund,” with many already outlining plans for their own DeFi projects.
Market Stats and Final Thoughts
The paradox of it all: this record spike in searches for DeFi coincided with the total value of assets in the sector peaking around $9.5 billion before abyssally plummeting to about $7.5 billion in just four days. As of now, the DeFi sector has somewhat stabilized at around $8.1 billion. Top protocols include Uniswap leading the pack with $1.57 billion, followed by Aave and MakerDAO with $1.37 billion and $1.29 billion respectively. China is grappling with a love-hate relationship with DeFi, but one thing is for sure: the interest is real!
