On-chain analytics show an exodus of ETH and stablecoins from centralized exchanges after the collapse of FTX.
A blockchain analysis conducted by a Nansen researcher highlighted the flow of ether.
and stable money from centralized exchanges in the wake of the FTX collapse.
Nansen Research analyst Sandra Leo posted a thread on Twitter unpacking the current state of decentralized finance (DeFi), with a specific focus on the movement of ETH and stablecoins.
As it stands, the Ethereum 2.0 deposit contract contains more than 15 million ETH, while the WETH deposit contract contains about 4 million enveloped ether (weTH). Web3 infrastructure development and investment company Jump Trading has over 2 million ETH tokens and is the third largest holder of ETH in the ecosystem.
Binance wallets Kraken, Bitfinex and Gemini list the largest ETH balances, while the Arbitrum Layer-2 switch bridge also holds significant amounts of Ether.
As Leo explained in his correspondence with Cointelegraph, the increase in the percentage of ETH held in smart contracts can be seen as an indication of ETH flowing into various DeFi products. These include decentralized exchanges, staking contracts and escrow services.
The recent collapse of FTX may also cause panic among users who hold assets with third-party custodians such as centralized exchanges. Leo highlighted the reality that the safety of funds held on an exchange is not guaranteed:
“It reinforces the quote ‘Not your keys, not your coins,’ which is especially important in times like these.”
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According to Nansen’s Exchange Flow Dashboard, Jump Trading stands out as a firm with a significant volume of withdrawals from exchanges relative to its deposits. Citing the firm’s exposure to Liquidity Hub Serum (SRM) tokens, Leo outlined several reasons for the token’s spike in trading movements:
“As FTX was exposed to the fallout, they had to delist some tokens from exchanges that needed liquidity. Over the past seven days, we have seen a spike in trading withdrawals on ETH, BUSD, USDC, USDT, SNX, HFT, CHZ, CVX and various other tokens from multiple exchanges.
A significant amount of ETH has flowed from several major exchanges over the past seven days. ETH worth $829 million left Gemini, while Upbit transferred $797 million ETH from its account. $597 million of ETH exited Coinbase and Bitfinex withdrew $542 million worth of ETH from its platform.
A significant amount of stablecoins have been moved off exchanges over the past week. $294 million worth of stablecoins flowed from Gemini, while Bitfinex transferred $173 million from its platform. USD 138 million and USD 108 million in stablecoins were withdrawn from the two exchanges.
Leo also explained the movement of stablecoins, telling Cointelegraph that the outflows are usually on the user side and capital is not flowing into the cryptocurrency space:
“Perhaps market contagion and a prolonged bear market is reducing the appetite for traders to actively invest and get involved in the space.”
Nansen has played its part in providing key insights into key ecosystem events in 2022. A blockchain analytics company examined chain data to determine the May 2022 collapse of Terra.
It followed a deep dive into the FTX collapse, with evidence pointing to collusion between the exchange and crypto trading firm Alameda Research. Both firms were created and managed by Sam Bankman-Fried.