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Top decentralized finance (DeFi) coins are sliding lower despite strength in the Ethereum price.
Data from Uniswap indicates that against the U.S. dollar, coins such as UNI, Compound’s COMP, and Yearn.finance’s YFI, have slid lower by 1-5% in the past 24 hours.
This slight move lower in the price action of these coins adds to an overall trend of consolidation seen in the DeFi market over the past week. After a strong breakout in January, which transitioned into early February, the DeFi market has cooled fairly rapidly.
DeFi Market Stumbles as Ethereum Pushes to New Highs
The DeFi market is stumbling as key market players fail to react positively to Ethereum’s push to new all-time highs.
Coins such as UNI, SNX, and COMP are sliding lower against Ethereum, and in some cases, against the U.S. dollar.
This consolidation appears to be a result of capital cycling back into Ethereum itself and other layer-one blockchain coins, such as Binance Coin (BNB) or Cosmos (ATOM).
Image below from CoinGecko, showing the performance of the top 13 DeFi coins over the past few days and weeks.
Related Reading: Wall Street Veteran Kickstarts Own Bitcoin Fund With $25m Investment
Decentralized Finance Gets Validation From Federal Reserve Report
While the short-term health of the DeFi market may look grim, the decentralized finance narrative gained steam last week.
The St. Louis Federal Reserve, a branch of the American central bank, published a report indicating that DeFi could lead to a “paradigm shift in the financial industry.”
The author of the report, a blockchain-focused professor at the University of Basel, elaborated on the matter:
“DeFi has unleashed a wave of innovation. On the one hand, developers are using smart contracts and the decentralized settlement layer to create trustless versions of traditional financial instruments. On the other hand, they are creating entirely new financial instruments that could not be realized without the underlying public blockchain.”
While this was not a direct endorsement by the Federal Reserve, the thesis that DeFi will disrupt finance in a positive manner has gained steam over recent weeks and months.
The general idea is that because blockchain systems are relatively open compared to traditional systems, DeFi should garner more value in the long run.
Related Reading: 3 Bitcoin On-Chain Trends Show a Macro Bull Market Is Brewing
Featured Image from Unsplash Chart from TradingView.com Price Tags: UNIUSD, UNIBTC, COMPUSD, COMPBTC Uniswap, Compound, Other DeFi Coins Are Slipping Lower
