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ETH Burn Rate Surges Amid Market Chaos and Record NFT Volume

In this week’s Market Action report, ETH is burning amid spiking NFT volume, and Aribitrum and Chainlink are rallying.

ETH Burn Rate Surges Amid Market Chaos and Record NFT Volume

Ethereum’s burn rate has seen a dramatic resurgence this week amid market volatility and renewed NFT volume, averaging 8.58 ETH every minute for the past seven days.

The spiking burn rate has come at a cost for Ethereum holders, with the asset losing 7% of its value to trade at its lowest level since September 2021. The heavy losses sustained by many leading DeFi tokens likely contributed to the burn rate too, as traders rushed to reduce exposure to many mid-cap crypto assets.

OpenSea was the largest source of burned ETH by far, with 15,507 destroyed for 18% of the network’s total. (OpenSea posted a new record for daily volume on Jan. 9 according to Dune Analytics, with $261M worth of NFTs changing hands).

OpenSea has already processed $2B worth of volume during the first nine days of January.  August 2021 posted the current all-time high for monthly volume on OpenSea with $3.4B. 

ETH transfers were the second-largest source of burn Ether this past week with 8,068 ETH or 9.3% of the total, followed by Uniswap v3 with 5,213 ETH or 6%, Tether with 3,405 ETH or 4%, and Uniswap v2 with 1,755 ETH or 2%.

Chainlink Rallies

In other DeFi market news, Chainlink (LINK) has rebounded this week, defying the bearish momentum that caused significant losses across most crypto markets from Jan. 3 to Jan. 10.

According to CoinGecko, Chainlink surged by nearly 29% during a week that saw the top 10 non-stablecoin cryptocurrencies post double-digit losses. According to CoinGecko, the move was driven by LINK’s strongest volume since May 2021.

LINK is the second-largest DeFi asset with a capitalization of $13B, ranking first by 24-hour trade volume with $3.08B. However, Chainlink is still down 47% from its all-time high of $52.7 posted in May last year, last changing hands for $28.14.

Coins associated with Dopex, a decentralized options exchange, were also on a tear this past week, with its rebate token RDPX and governance token DPX ranking as the first and third best-performing DeFi tokens with respective weekly gains of 103% and 26.2%.

Top Gainers

Just nine of DeFi’s top 100 tokens by market cap posted a gain of more than 1% for the week, signaling bearish momentum across the decentralized finance sector.

Dopex Rebate Token (RDPX) + 103%

Chainlink (LINK) + 29%

Dopex (DPX) + 26.2%

GMX (GMX) + 23.7%

Tokemak + 23%

Biggest Losers

More than 65 of leading DeFi assets suffered double-digit gains this week, with nearly one-quarter of the top 100 tokens shedding more than 20%.

Recently surging standouts from the Avalanche ecosystem Wonderland (TIME) and Abracadabra (SPELL) were among the tokens hardest hit, with both shedding more than 30% in just seven days.

Popsicle Finance (ICE) – 40%

Spell Token (SPELL) – 37.2%

Wonderland (TIME) – 31.7%

Bonfida (FIDA) – 29%

Curve DAO Token (CRV) – 25.3%

Leading Networks’ TVLs Plunge to New Lows

The combined total value locked (TVL) in DeFi protocols has pulled back 7.6% to $231B after retesting its previous all-time high last week, according to DeFi Llama

Ethereum’s TVL has slumped to its lowest level since October, with $144.7B currently locked across the network following an 8.5% retracement. Three-quarters of Ethereum’s 20-largest protocols experienced TVL drawdowns of between 4% and 17%, including each top seven.

Terra ranks second with $17B, riding a weekly draw-down of roughly 12%. Seventh-ranked Pylon Protocol was Terra’s sole top ten protocol to post TVL growth for the week, while 11th-ranked Loop Finance bucked the broader trend with a 60.6% gain.

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Binance Smart Chain continues to shed market share, sitting at $15.1B after its TVL fell 7.9%. BSC. The sum locked in BSC has fallen to its lowest level since early August, with 15 of the network’s 20-largest protocols suffering losses for the week.

Avalanche remains the fourth-largest network by DeFi TVL with approximately $11B. While the network has partially recovered from its Jan. 3 dip to $10.2B, it is down 9.2% in six days. Three-quarters of its top 20 dapps are down for the week.

Solana’s TVL currently sits at $9.85B, with the network slipping below $10B for the first time since October on a weekly drawdown of 15.6%. Only three of Solana’s 20 biggest protocols enjoyed growth for the past seven days.

Fantom ranks seventh with a $5.4B TVL after posting bucking the trend with weekly growth of 5%.

Leading networks by DeFi TVL

Arbitrum Move

Leading Ethereum L2 network Arbitrum was among the few networks to post TVL growth this past week, sitting at $2.57B after gaining close to 7% in seven days, according to L2beat. Arbitrum currently represents 47% of Ethereum L2 value. Second-ranked L2 derivatives exchange dYdX also posted modest growth of 1.3% to close the week at $987.

Loopring ranks third with $448M after shedding 19% in seven days, followed by Boba Network with $432 following a 10% retracement. The gap between Optimism and Boba continues to close, with Optimism banking fifth with $402 after a modest 3.7% draw-down.

Metis Andromeda, ZKSwap, and Immutable X follow in the rankings after weekly pull-backs of 10.5%, 12%, and 23.5% respectively.

The combined TVL of L2s is down 7.2% at $5.46B.

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