Quick take:
- The amount of Ethereum locked in DeFi has dropped by 2.23 Million ETH since mid-November
- The current amount of ETH locked in DeFi is 6.7M compared to 8.929M in mid-November
- The drop coincided with ETH staking on ETH2.0
- Staking on ETH2.0 might be a safer alternative to DeFi where rug pulls and flash loans are normal
The amount of Ethereum locked in DeFi protocols since mid-November has seen a drastic drop. According to data from DeFiPulse.com, the amount of Ethereum locked in DeFi has dropped by approximately 2.23 Million since November 15th.
At the latter date, the amount of Etheruem locked in DeFi stood at 8.929 Million. At the time of writing, the amount of Ethereum locked in DeFi currently stands at 6.7 million ETH. This is a drastic drop of 25% and can be visualized via the following chart courtesy of DeFiPulse.com.
The Drop Coincided With Ethereum Staking on ETH2.0
The drop in the amount of Ethereum on DeFi protocols coincided with the staking of Ethereum on ETH2.0. According to data from CryptoQuant.com, the number of Ethereum deposited to the ETH2.0 contract started to increase exponentially around mid-November. The chart below, courtesy of CryptoQuant.com, further demonstrates this fact.
ETH2.0 Staking Might be Safer than DeFi
At the time of writing, a total of 978,656 ETH has been deposited to the staking contract thus accounting for approximately half of the Ethereum that is no longer locked in DeFi.
Also worth mentioning, is that the crypto exchanges of Binance and Coinbase plan to support ETH2.0 staking. Binance has already started allowing users to stake their ETH whereas Coinbase will do so in 2021.
This in turn means that Ethereum investors need not have the full 32 ETH required for ETH2.0 staking and can participate via pooling on these exchanges. In the case of Binance, staking rewards are estimated at between 5% and 20% APY.
The attractiveness and safety of funds on crypto exchanges could provide an incentive for Ethereum investors to choose ETH2.0 staking over DeFi protocols. The latter have been prone to rug pulls and flash loans thus creating a slight level of anxiety for yield farmers.