The DeFi analytics platform IntoTheBlock confirmed a surge in demand for high-risk DeFi loans due to market sentiment. However, experts are concerned about potential volatility due to the upcoming US elections.
Surge in DeFi Loan Demand
The rise in decentralized finance loans has been noticeable since the beginning of the year, with several lending protocols, including EigenLayer, gaining traction. In June, decentralized finance lending surpassed $11 billion in loans issued, with Aave V3 leading the protocols by issuing over $6 billion in loans.
Risks of High-Risk Loans
A key indicator to observe in lending protocols is high-risk loans within 5% of liquidation. Spikes in high-risk loans can lead to cascading liquidations and impact collateral value. IntoTheBlock reported that such loans on the Benqi platform have reached a two-year high of $55 million.
Impact of Elections on Crypto Market
The crypto market has shown growth after the elections on November 5, despite expected volatility. Bitcoin reached an all-time high of $75,000, and Ethereum saw a notable boost to over $2,800. Trump's victory suggests potential growth in DeFi activity and friendlier regulations in the crypto space.
The situation with high-risk DeFi loans and the impact of political uncertainty highlight the need for careful analysis and informed decision-making by market participants.
