• USDC losing its peg pulled down the markets, but many saw it as an opportunity to pay loans at a discount
• Debtors saved around $100 million off their loans during the market rout

As the crypto-market suffered over the weekend, there was a silver lining for some. When stablecoins lost their dollar peg, a group of debtors were able to gain profits. In fact, a recent report from crypto-data provider Kaiko shed light on how borrowers were able to snatch a discount on their loan payments.

Leading DeFi protocols Aave and Compound saw debtors rushing to repay their loans on 11 March when stablecoins were undergoing a downgrade. 

Debtors find solace as USDC fell

The collapse of Silicon Valley Bank triggered a downward spiral for many stablecoins. It led to USDC slumping to as low as $0.87 on 11 March, with other coins soon following suit. USDC has since regained its peg, however, and was trading at $0.99 at press time.

On that day, Aave and Compound saw loan repayments worth around $2 billion, according to Kaiko. Here, it is to be noted that a majority of these payments were made using USDC while some were made with DAI.

Debtors were able to repay the loans at a reduction because of the coins’ de-pegging. This is an interesting finding because if we look at the data, the days preceding and following 11 March did not see much activity at all.

Analytics firm Flipside Crypto further revealed that borrowers saved around $100 million. This included USDC debtors saving $84.1 million and debtors of DAI saving $20.8 million.

Aave and Compound also saw massive withdrawals after coins lost their peg, according to Flipside Crypto. In fact, Compound users withdrew around $400 million while $13.1B was withdrawn from Aave, $11.9B of which was ETH.

These repayments and withdrawals indicate that DeFi protocols saw tremendous activity as stablecoins fell. The massive price dislocations created arbitrage opportunities across the ecosystem, highlighting the importance of USDC once again.

• Uniswap witnessed a high surge in activity due to SVB’s collapse. 
• However, its UNI token didn’t see the same growth.

The fall of SVB has brought a shockwave to many investors in the crypto community. While major firms and large stablecoin issuers faced the heat, the DEX sector of the crypto space, managed to see growth.

Read UNI’s Price Prediction 2023-2024

For instance, Uniswap witnessed an all-time high in terms of volume and outperformed Nasdaq by 5%.

Other DeFi protocols such as Aave and Curve also observed a spike in activity during this period. Due to the high activity registered on these protocols, the fees generated by them increased.

Yesterday, #DeFi transactions were highly active because of the panic surrounding #USDC. #Uniswap fees saw a surge, reaching $8.7 million, the highest since May 12 of last year. Curve fees also increased, reaching $950,000, the highest since November 10 of https://t.co/TuhZEhbDtA… https://t.co/LGTNu4bUGi pic.twitter.com/vysQRnlfke

— BecauseBitcoin.com (@BecauseBitcoin) March 12, 2023

Advertisement

Interestingly, the spike in fees generated impacted the revenue collected by these protocols. According to Messari’s data, revenue generated by Uniswap increased by 0.74%, whereas the Curve protocol witnessed an uptick of 0.12%.

However, Aave observed the most growth in this regard as it saw a spike of 48.76% in terms of revenue collected over the last week.

The high spike in revenue for Aave was made possible because there was a surge of 89.93% in the number of unique users on the Aave protocol.

Not all roses and sunshine

The high activity on all these protocols, however, did not translate to a surge in the total value locked (TVL) on them.

According to DeFi Llama’s data, Uniswap’s TVL fell by 17.29% in the past few days. The Curve protocol’s TVL witnessed a similar decline and fell by 20% in the same period.

Meanwhile, it was found based on Messari’s data, bots were responsible for the majority of the activity on the Uniswap protocol.

The same was observed for the Curve protocol. According to Dune Analytics’ data, the bot volume on the curve protocol increased from 13.5% to 41.3% in the last few days.

The tokens of these protocols did not observe any growth either. The prices of UNI, CRV, and AAVE, fell over the last month.

Parallelly, the network growth of the tokens declined at press time. Thus, suggesting that these tokens weren’t being used by any new addresses, at the time of writing.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion

• AAVE oscillated in a range in the past few weeks. 
• A recovery could offer significant gains if it overcomes a key hurdle.

AAVE traded in the $73 – $95 range in the past few days. Bitcoin [BTC] sharp decline on Thursday (2 March) sent the AAVE to retest its range support zone.

But it seems investors aren’t exiting the market, which could potentially boost a bullish recovery if demand increases for AAVE at its current discounted prices. 

Read AAVE’s [AAVE] Price Prediction 2023-24

AAVE dropped to the key support zone

The $95 level has become a key resistance, preventing bulls from inflicting further gains after the impressive rally in January. So far, the $90 – $95.5 zone has become a key sell pressure area. 

Similarly, the $73 – $77.8 is a key support zone (green) that has seen significant demand in the past retests. If the trend repeats, the retest witnessed at press time could drive demand for AAVE at the current price level. Such a demand could push AAVE toward the sell pressure zone (red).

Bulls could be boosted if the price breaks above the price of control/value area above $80 (red line) and retest it. The Fixed Range Volume Profile (VRVP) shows the traded volume over a price range and highlights the price with the highest volume (red line).

A break and pull-back retest at $80.8 could boost the uptrend to target the supply zone – a potential 11% hike. 

On the contrary, bears could undermine bulls’ efforts if they sink AAVE below the support zone. Such a downswing could see AAVE drops further toward $66. 

The RSI fell gently over the past few days and was below 50 at press time, reinforcing that bears have leverage in the current structure. Similarly, the Average Directional Movement Index (ADX) moved southwards, showing the rally at the start of the year weakened and could experience extended consolidation or retracement. 

The Funding Rate rebounded, but …

AAVE’s Funding Rate dipped and improved later, as shown by Santiment, indicating that demand improved – a bullish signal. Similarly, supply out of exchanges spiked, confirming short-term accumulation, which could tip bulls to enter the market in the long run. 

Is your portfolio green? Check out the AAVE Profit Calculator

However, selling pressure came from addresses holding 1k to 10k AAVEs and 10k to 100k AAVEs, which controlled 6% and 18% of the market supply, respectively.

But the dominant whale category (48% of supply) was inactive at press time. Therefore, cautious investors could wait for a pullback retest on the support zone before making moves.