$1 Billion Worth Of ETH Will Be Released Into The DeFi Market

$1 billion worth of ETH will be released into the DeFi market on November 17 as Uniswap’s yield farming opportunity will end so let’s read some more in the ethereum news today.

When the project’s governance token released in September, the yield farming opportunity was launching, allowing users to earn UNI by depositing liquidity into the decentralized exchange. This became one of the most popular yield farms which generated $1 billion, then $2 billion worth of deposits in the span of weeks.

With the initial yield farming opportunity coming to an end, the $2 billion in crypto locked up as Uniswap liquidity will be deployed back into the market. Analysts started asking what will happen when this happens, will users dump their liquidity for stablecoins or will they use them to buy altcoins?

According to Darryl Wang, the investment analyst at leading DeFi fund DeFiance Capital and the former JPMorgan investment banker, about $1 billion worth of ETH and stablecoins in wrapped Bitcoin will soon exit the Uniswap staking pools. The UNI yield farming opportunity launched with the token will end soon unless extended. This raises the question of where the capital will go. Wang continued to say that most of the liquidity will “leave Uniswap’s system in search of higher yields.” His suggestion is that 50 percent of the liquidity or $500 million in ETH and then another $500 million in stablecoins and wrapped BTC.

1/ On 17th Nov, $UNI farming will end.

Right now ~$2.3bn funds are deployed farming UNI, with $ETH being the reference token.

This means that there is currently ~$1.1bn ETH locked up, about to be released into the wild.

Where do you think that ETH will go? pic.twitter.com/nW3via0vH6

— Wangarian (@Wangarian1) November 11, 2020

Focusing on Ethereum, he said that there are a few opportunities for the holders like staking in DeFi applications like Alpha Homora, SushiSwap, or the ETH2 that are held for the long-term or being sold for stablecoins and altcoins. Most of that will be sold and as many remember, on the day of UNI Yield farming launched, the altcoin rallied by about 6 percent so Wang explained that this was a byproduct of farmers that accumulated ETH to farm with:

 “Commercial farmers loaded up on ETH to capitalize on UNI rewards and when they end, it is likely these farmers will offload their ETH as well.”

This fact, along with the rally on the altcoin market, leads Wang to suggest that Ethereum being sold for altcoins down the risk curve has a high chance of playing out. We already saw that this happened once as stablecoins got deployed for altcoins during the growing expectations of the second DeFi wave which will be bigger than the first.