Cardano DeFi has thrived despite being designated as a security tool by the US Securities and Exchange Commission (ADA), but that hasn’t stopped many users from dumping their holdings.
Cardano’s total value locked (TVL) has reached a record high of ADA 578 million, according to data from DeFiLlama.
Cardano DeFi activities are booming
Since the beginning of the year, DeFi activity on Cardano has increased exponentially, with more traders using decentralized applications built on the blockchain.
Evidence of Cardano’s thriving DeFi sector is reflected in the growth of the top 10 protocols. According to DeFillama data, these protocols have registered double-digit growth over the past month.
In addition, Cardano registered more than 1,000 Plutos V1 smart contracts in 2023 – another indication of increased activity on the blockchain network.
ADA holders are selling at a loss due to the price conflict
Blockchain analysis firm Santiment noted that a significant amount of ADA was sold at a loss over the past week after investors gained. The company noted that ADA mainly witnessed high sales at low prices.
IntoTheBlock data It further shows that nearly 90% of ADA holders do so at a loss.
Although there could be many reasons for traders to go short, the decision of the US Securities and Exchange Commission to designate ADA as a security in June may have weighed on some traders. Although the Cardano Foundation disputed this rating, it is clear that the rating affected market sentiment surrounding the asset.
However, the SEC’s designation only exacerbates ADA’s problems. The price of the cryptocurrency has been struggling for several months, reaching a two-year low of $0.23 after authorities called it a guarantee.
This explains why Cardano’s dollar TVL has remained below $200 million since it peaked at $326 million in March 2022, despite the constant increase in ADA trapped within the ecosystem.
Meanwhile, ADA is trading at $0.286 after rising 2.6% in the past 24 hours, according to data from BeInCrypto. However, its value has dropped by about 40% over the past year.
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