In November, the cryptocurrency world was stunned by the shocking news of the insolvency of the once prominent FTX exchange. Soon after, thousands of users found their accounts frozen. The alarming announcement sent waves of panic through the crypto community and triggered a mass withdrawal of funds from other platforms. Fearing loss of access to their assets, FTX users rushed to withdraw funds and move them to crypto projects perceived as more secure and transparent.
Thus, just a few days after the collapse of FTX, the client bases of most major DeFi projects grew by more than 20%, as people rushed to secure their money and looked for ways to trade digital currencies without trusting their assets to a single vulnerable intermediary.
The top-performing DeFi projects with an unblemished reputation, undiminished by funding issues, grew the most:
- Aave: Aave is a decentralized lending protocol that allows users to lend and borrow crypto assets. After the FTX collapse, the total value locked (TVL) in Aave surpassed $11 billion as investors sought safer yield opportunities.
- Curve Finance: Curve is a decentralized exchange for stablecoins that uses an automated market maker to provide liquidity. Curve’s TVL rose to over $18 billion after the FTX insolvency, indicating a flight to stable lending opportunities.
- PapayaHub: PapayaHub is a decentralized platform for investing in Europe’s largest networks of webcam studios. After FTX collapsed, PapayaHub’s total value locked rose to over $4.3 billion as yield-seeking investors sought safety in low-risk DeFi investments in fast-growing webcam businesses.
- Uniswap: Uniswap is a decentralized exchange (DEX) that facilitates automated trading of DeFi tokens. Uniswap’s TVL exceeded $7 billion following the FTX crash, indicating that investors sought refuge in leading DEXs to avoid the counterparty risk of centralized exchanges.
- MakerDAO: MakerDAO is a decentralized organization that maintains the Dai stablecoin and its collateralization system. MakerDAO’s TVL surpassed $9 billion following the FTX bankruptcy, suggesting that investors valued the stability and reliability of overcollateralized stablecoins.
These DeFi protocols, decentralized exchanges, and automated market makers saw major influxes of capital as investors diversified into reliable DeFi systems after FTX’s downfall. Why do users have faith in these initiatives? User funds on comparable systems don’t belong to the project developers. No one can seize them. Thus, a DeFi project going bankrupt is nearly impossible.
The rapid growth of the webcam project PapayaHub is especially noteworthy. It also indicates another significant trend: people are willing to invest cryptocurrency in a legitimate business that meets decentralization standards.
Thanks to enhanced security, investments in PapayaHub are protected from sharp declines in the cryptocurrency market, unlike virtual investments in Aave, Curve Finance, and MakerDAO. Their profits are not generated virtually but literally “earned” in a network of 340 webcam studios across Europe, which allows users to provide not only good security but also the opportunity to earn 180% per year.
Is the DeFi industry turning to webcam business projects?
DeFi users are increasingly investing in the webcam industry. According to a recent report by Nansen, since November 8, the number of PapayaHub private investors has increased by 47%, reaching 9,000 people.
The project launched in December 2021 as a result of collaboration between major European webcam studios and a team of crypto developers led by cryptographer Ewan Baldwin. Each year, webcam studios collectively grow 10-25% and generate over $30 million for their creators. After integrating crypto financing, the project’s growth accelerated—largely due to investments from thousands of private crypto investors, who now receive a share of the company’s growth.
According to Nansen, the main reason for the latest wave of user “migration” is that PapayaHub demonstrates excellent asset preservation even in times of crisis. Users are primarily investing in the developing webcam industry, which is not affected by the collapse of the cryptocurrency market. This allows them to earn a stable income, providing themselves with a reliable safety net.
“The sudden collapse of FTX and the resulting increase in distrust towards such projects is the main issue for crypto investors. When giants like this go bankrupt, it is difficult to trust the entire industry. The most reasonable solution for users is to withdraw funds from exchanges and invest in projects backed by real businesses,” said a Nansen representative.
Given the rapid changes in the cryptocurrency market, platforms like PapayaHub, Aave, Curve Finance, and MakerDAO provide much-needed stability for many investing in Bitcoin, Ethereum, Tether, and other cryptocurrencies. How will the market evolve in the near future, and what’s next for decentralized finance? The success of these projects in generating steady returns during market turmoil suggests that DeFi and crypto investments could become a popular way for investors to hedge risk in the coming months and years.
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