'Hyperinflation' DeFi coins hit the hardest in crash: Report

Many high inflation decentralized finance tokens are still correcting despite Bitcoin's push to new yearly highs.

Research by IntoTheBlock suggests that DeFi token prices and protocol metrics have diverged significantly since September.

The high supply inflation tokens hit the hardest include Compound, Balancer, MCDEX, Curve, and mStable, all of which have dropped by at least 60% since the beginning of September.

Overall Ethereum-based DeFi governance tokens have declined by approximately a third from $7.5 billion to $5.07 billion in terms of market cap just in the last month.

Stablecoins and versions of wrapped Bitcoin continued to grow their market capitalizations which further confirms that yield farmers have shifted out of high-risk DeFi tokens into lower yield generating assets which also have lower volatility.

Following the COMP token launch, hundreds of clones and forks were spawned, each with their own governance tokens and yield farming pools and initially at least, many saw liquidity and token prices grow until the markets started to crash in September.

The much hyped Yearn Finance token has also taken a huge hit.

According to IntoTheBlock's DeFi app, most YFI addresses that acquired the token over the past two months are now "Out of the money." YFI has declined almost 70% since its peak of $44K on September 13.

The research concluded that these price swings and large pullbacks are normal for such a nascent market and DeFi tokens only represent a tiny amount of the total crypto market capitalization.

On a positive note, it stated that the DeFi sector continues to move forward despite the token crash and there is a lot of room for growth as these systems become scalable and adopted.