We have witnessed a crypto blood bath yesterday on 19th May 2021. And it will be recorded in history. The crypto market has shed billions amid a week of bearish news up to a total of around $600 billion wiped off from the crypto market.
Bitcoin plummeted to lows of around $30,415, a drop of 30% over the past 24 hours. Likewise, Ethereum plunged 40% to $2,059. Both tokens are on the recovery track and currently traded at $37,894.29 (BTC) and $2,443.78 (ETH) at press time.
The week starting Monday was full of bearish news and sentiments all over starting with Elon Musk suspending bitcoin payment for Tesla over energy usage and environmental concerns to a group of Chinese payments and finance associations doubled down on the central bank’s 2017 ban on financial institutions engaging in crypto transactions and warned investors against speculative crypto trading.
The crashing market has seen crypto sites buckling under the pressure, with sites including cryptocurrency exchange Coinbase and price checking sites CoinGecko and CoinMarketCap suffering intermittent outages. Crypto exchange Binance has also paused all ETH and ERC-20 withdrawals “due to network congestion,” according to a tweet.
As traders on Ethereum rush to the exits, gas prices on the number two crypto network have skyrocketed. According to Etherscan, the average transaction is costing ~344 gwei with the highest cost went up to 700 gwei.
While centralized exchanges faced trouble keeping up, decentralized exchanges on the other hand managed to stay up despite the high trading volumes generated by today’s selloff. Both Uniswap and SushiSwap, the most used decentralized exchanges were reported working “flawlessly” the entire day.
Why decentralized exchanges (DEX) outperformed their counterpart?
In the case of centralized exchanges, trades aren’t registered directly on the blockchain but rather within the exchange’s own wallets. Centralized exchanges take custody of your crypto and trade on your behalf on the blockchain. They have their own controlled infrastructure to run their services.
However, in the case of decentralized exchanges, it facilitates peer-to-peer trading and doesn’t take custody of users’ assets. Decentralized exchanges are immune to such outages that are faced by their centralized exchanges because they’re distributed protocols that use smart contracts on a public blockchain, often Ethereum, to run. As long as the blockchain is operating, DEXs keep on trading. And blockchains have redundancies built in so that they do away with downtime; millions of computers are running the software around the world.