Layer by Layer Issue 31: Cosmos, Avalanche, and Solana

Crypto markets remain shaken after a tumultuous week that saw the stunning collapse of Terra and its algorithmic stablecoin, UST. Given Terra’s rapid rise to prominence over the past year, the extreme drawdown in the prices of both LUNA and UST also caused a sharp fall in the total value locked (TVL) in DeFi protocols in layer 1 (L1) ecosystems as a whole.

Since the beginning of May, DeFi TVL across L1 ecosystems has fallen by about $75.7 billion as of this writing, marking a decline of about 44% in just 2 ½ weeks. A significant portion of this drop can be accounted for by LUNA and UST’s collapse, with the Terra ecosystem losing about $27.8 billion over the same period. Despite rising to become the second-largest L1 ecosystem in terms of TVL, behind only Ethereum over the past year, Terra has now lost more than 99% of its TVL since the start of May.