The current state of decentralised finance (DeFi) was examined in a thread on Twitter by Nansen research analyst Sandra Leow, focusing on the movement of ETH and stablecoins away from crypto exchanges. Currently, more than 15 million ETH are held in the Ethereum 2.0 deposit contract, while 4 million Wrapped Ether (wETH) are kept in the wETH deposit contract. With more than 2 million tokens, Jump Trading is the ecosystem's third-largest ETH holder. It creates and funds the infrastructure for Web3.
It is important to note that Binance, Kraken, Bitfinex, and Gemini have the largest ETH balances among wallets. In addition, there is a sizable holding of ETH on the Arbitrum layer 2 roll-up bridge.
Leow outlined how the percentage rise in ETH stored in smart contracts can be interpreted as ETH moving into various DeFi products in a letter to Cointelegraph. Staking contracts, decentralised crypto exchanges, and custody services fall under this category.
"There is an amplification for the statement. Not your keys, not your coins, and this are especially relevant given times like these," Leow said, highlighting the possibility that the safety of cash housed on crypto exchanges may not be guaranteed.
According to Nansen's exchange flow dashboard, Jump Trading is a business with substantial exchange withdrawal volumes relative to its deposits. Leow offered several potential explanations for Jump Trading's token movements, pointing out the company's exposure to Serum (SRM) tokens, a liquidity hub. They had to remove some tokens from crypto exchanges that required liquidity because of their exposure to the FTX fallout. Jump Trading has pulled ETH, BUSD, USDC, USDT, SNX, HFT, CHZ, CVX, and other tokens from various crypto exchanges over the past seven days.
Over the previous seven days, a sizeable quantity of ETH has also moved out of several significant exchanges. The amount of ETH that left Gemini was $829 million, whereas the amount that left Upbit's account was $797 million. The amount of ETH that left Coinbase was $597 million, and the amount that left Bitfinex's platform was $542 million.
Additionally, within the past week, several stablecoins were removed from exchanges. Gemini saw the movement of stablecoins worth $294 million, while Bitfinex had $173 million leave its platform. Stablecoins worth $138 million and $108 million was then removed from KuCoin and Coinbase, the two exchanges, respectively.
Leow also explained the stablecoin movement that outflows are often a sign that investors are staying away from the crypto market and that users are not actively participating, "Perhaps, the prolonged bear market and market contagion diminish traders' appetite to invest and engage in the space actively."
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash