Decentral Block Post

The historic deleveraging of the cryptocurrency market could be coming to an end, which could signal the close of the worst of the bear market, according to a JPMorgan analyst.

In a Wednesday note, JPMorgan strategist Nikolaos Panigirtzoglou highlighted increased willingness of firms to bail out companies, and a healthy pace of venture capital funding in May and June as the basis for his optimism. He said key indicators support the assessment:

"Indicators like our Net Leverage metric suggest that deleveraging is already well advanced."

The deleveraging of major crypto firms, where their assets have been sold either willingly, in a rush, or via liquidation, began largely in May when the Terra ecosystem collapsed and wiped out tens of billions of dollars. Since then, crypto lenders BlockFi and Celsius, and investment firm Three Arrows Capital have run into their own problems.

Panigirtzoglou added that the severity of deleveraging of some crypto firms could be so severe that they "suggest that the tremors from this year's crypto market fall continue to reverberate."

The cryptocurrency market has had a rough go this year and the collapse of multiple projects and funds sparked a contagion effect that has affected just about everyone in the space. 

The dust has yet to settle, but a steady flow of details is allowing investors to piece together a picture that highlights the systemic risks of decentralized finance and poor risk management.

Here’s a look at what several experts are saying about the reasons behind the DeFi crash and their perspectives on what needs to be done for the sector to make a comeback.

Failure to generate sustainable revenue

One of the most frequently cited reasons for DeFi protocols struggling is their inability to generate sustainable income that adds meaningful value to the platform's ecosystem.

In their attempt to attract users, high yields were offered at an unsustainable rate, while there was insufficient inflow to offset payouts and provide underlying value for the platform's native token.

The cryptocurrency market has had a rough go this year and the collapse of multiple projects and funds sparked a contagion effect that has affected just about everyone in the space. 

The dust has yet to settle, but a steady flow of details is allowing investors to piece together a picture that highlights the systemic risks of decentralized finance and poor risk management.

Here’s a look at what several experts are saying about the reasons behind the DeFi crash and their perspectives on what needs to be done for the sector to make a comeback.

Failure to generate sustainable revenue

One of the most frequently cited reasons for DeFi protocols struggling is their inability to generate sustainable income that adds meaningful value to the platform's ecosystem.

In their attempt to attract users, high yields were offered at an unsustainable rate, while there was insufficient inflow to offset payouts and provide underlying value for the platform's native token.

The crypto sector is caught in a deep correction and recent reporting shows that a majority of altcoins are more than 70% down from their 2021 highs. Solana is among that list and investors are on the fence about whether the token has strong enough fundamentals to warrant buying SOL at its current value. 

Data from Cointelegraph Markets Pro and TradingView shows SOL is down 87.5% from its all-time high and given the current state of the market, most price breakouts fail to notch a daily higher high.

Despite, the dismal outlook, there are a few potential positives that could make Solana a project to watch once the wider market enters a consolidation phase.

Solana Mobile

SOL price received a quick boost late last week after a June 23 announcement that the project would release a Solana mobile stack which enables native Android Web3 apps on Solana.

To go along with the new operating interface for smartphones, Solana also revealed that it will be releasing its own “Saga” Android phone through Solana Mobile in an effort to lead the way on Web3-enabled devices.