Ethereum and other DeFi projects suffered heavy losses
Recently, the market growth has been driven by the popularity and increased interest in Ethereum-based DeFi tokens, as a result of which the leading altcoin reached a new high, demonstrating znvrenya, which were recorded only in 2018.
Reaching record levels highs on the back of the booming DeFi sector, Ethereum (ETH) experienced a strong drop on Friday. ETH continued to fall on Saturday, generally losing more than 35% of its value, and is now slightly correcting.
Other Ethereum-based DeFi sector tokens have lost even more. So Link, which recently showed the best results results among the leading cryptocurrencies, lost 40% of its value.
The most heavily affected token is SushiSwap( SUSHI), which lost 69.63% on the day. The situation worsened after the project Manager, Chef Nomi, sold all his tokens.
The DeFi space has a lot of upside probabilities, which suggests that this pullback may only be a temporary move before a possible return to the uptrend and finding a "fair price".
A threat to the growth of the Ethereum ecosystem in the long term is high fees for transactions.
Jacob Franek, co-founder of Coin Metrics, a crypto Analytics company, recently noted that the extremely high transaction fees incurred by Ethereum users can lead to a natural hard cap on growth.:
"Gas prices will be severely restricted in this sector. bullish DeFi growth. This is to be expected, and probably a good thing ... High gas levels are probably a new phenomenon»
Perhaps this will not be a problem in the future, provided that the solutions proposed by the developers of Ethereum will be effective. But for now, this is a concern, especially because developers blockchains are aimed at more retail-oriented users with new applications.
Currently, it is difficult to say how low ETH will fall before reaching the bottom. However, given the growing correlation with bitcoin, the coin will continue to fall.