After surging abruptly in summer 2020, the decentralized finance (DeFi) is slowing down. According to the most recent analysis, the number of Bitcoin locked in DeFi smart is declining as investors withdraw their assets from Ethereum based DeFi protocols. In less than two weeks, the amount of Bitcoin has slumped to 147,350 from 153,591, a drop of 6,421 BTC, worth almost $120 million.
The excitement around DeFi protocols was mainly lifted by the introduction of reward incentives and yield farming in which investors poured billions of dollars. Bitcoiners have actively converted assets to Ethereum based tokens in order to participate in various decentralized finance(DeFi) protocols.
To lock assets in a Defi smart contract, investors utilize synthetic Bitcoin. Wrapped Bitcoin, WBTC, is the most well-known form of synthetic Bitcoin that makes over 80% of the total Bitcoin held on the Ethereum network. On November 9, the number of Wrapped Bitcoin surged to 124,260 BTC. After hitting the highest peak, the figure drops to 119,893 BTC.
Bitcoin Locked Up in DeFi Falls After Incentives Wiping
The amount of Bitcoin is starting to fall as DeFi rewards and incentives are wiping up. CryptoCompare product manager Charlie Humberstone said, “The DeFi bull run was driven by the yield farming craze. However, as these liquidity mining incentives decreased, so too has trading activity on DeFi protocols, which is why traders have less demand for tokenized assets such as WBTC.”
For long-term HODLers, DeFi reward incentives and yield farming was an attractive option to earn money on their holdings. Amid the price surge, HODLers who locked the asset in DeFi smart contracts to wait for the Bitcoin bull run possibly have sell Bitcoin. As it rallies from $10,500 to $19,110.