According to data from Defillama, a leading DeFi and blockchain data aggregator, the total value locked across DeFi protocols still sits below the $55 billion mark. The DeFi TVL represents the total value of crypto tokens locked in smart contracts. The last time the DeFi industry’s TVL surpassed the $55 billion mark was in November last year.
This may surprise DeFi fans and investors as the crypto market has been on a roll. The bulls ramped in the last few days as Bitcoin reclaimed and surpassed $24,000. Following BTC’s new highs, DeFi coins like Ether, Solana, and Polygon also soared, giving investors the pump they’ve longed for.
ETH gained over 14% in the past week, while SOL and MATIC have increased by 28% and 26%, respectively. With new money entering the cryptocurrency market, TVL across DeFi pools rose slightly.
In the past week, the DeFi TVL gained around $3 billion in value, representing a 6% increase in liquidity pools. While this surge is applaudable, DeFi protocols are yet to reach significant price milestones compared to the previous year.
Currently, the DeFi ecosystem boasts a TVL of $50 billion across all pools. The Ethereum blockchain still rules the ecosystem, with a 60% dominance. Similarly, Lido protocol dominates the DeFi pools, hosting 17% of all locked tokens.
DeFi – A Fast-Growing Industry
Bitcoin has existed since 2009, and Ether was launched in the cryptocurrency market in 2015. Both tokens have played a pivotal role in decentralization. However, the term DeFi only became popular in 2018, and has since drawn more attention.
Attention for DeFi protocols peaked in 2018, and more retail investors joined the market. Again, in 2020 and 2021, DeFi appeared super-hot, with DeFi TVL reaching an all-time high of $110 billion in November 2021.
Despite the massive growth of the DeFi ecosystem in just a few years, the market’s volatility cannot be brushed aside. Interestingly, the volatility of DeFi tokens has served as a double-edged sword for investors over the years. Crypto tokens like ETH, AVAX, and DOT have crashed significantly from their peaks several times. Similarly, investors have realized massive gains in bullish times.
Notably, even with the volatility of tokens, the world of decentralized finance has numerous benefits. One benefit is that users can access loans and lend money without an intermediary. Crypto loans have extra benefits that are absent in traditional finance. For example, borrowers can implement folding strategies to maximize their capital and potential asset value. Arbitrage traders can also utilize flash loans to make profits. Undoubtedly, the multiple benefits of decentralized finance has created the prominent tag – “the future of finance.”