Decentralized finance, also known as DeFi, has continued its unabated growth in the crypto industry as one of the metrics used to measure its progress, total value locked (TVL), has reached a new all-time high of above $250 billion. While Ethereum holds the lion’s share of TVL in DeFi, a great number of decentralized applications (Dapps) are supporting a slew of alternative blockchains.
Decentralized finance (DeFi) has had an incredibly successful year in 2021 and there are still no signs of slowing down in the space. Investors are flocking en masse to this space that offers users rewards in return for the digital assets that they are holding on to. The opportunities in the space have continued to grow and this is highlighted by the amount of funds locked up in DeFi protocols.
During Bitcoin’s green run in October, the TVL of the crypto niche crossed the $200 million mark, and within the space of two weeks after breaching that mark, data from Defillama is now showing that its TVL has surged by 25% to over $250 billion.
While DeFi protocols have seen an uptick in their values, it is important to note that ecosystems, which these protocols are built on like Ethereum, Solana, and Avalanche, have also seen a rise in their value within this period too. Ethereum and Solana, for instance, have seen their prices rise to as high as $4664 and $250 within the last 30 days.
No doubt, this played an active role in the rise of the TVL of the protocols, being built on these blockchain networks.
Ethereum may not have seen Solana volumes recently, it still maintains its position as the most dominant network in the space. Ethereum TVL accounts for over 67% of the total DeFi TVL with $172.75 billion locked on the network. It remains the top smart contracts platform in the crypto space and is the first stop for users looking to get started on their DeFi journey.
MakerDAO made the top of the list as the Ethereum-based protocol with the highest change in a 7-day rolling period. A total of $18.2 billion in TVL is locked in this protocol, according to DeFi Llama. It is, however, not the protocol with the highest TVL. That title goes to Curve (CRV), with $19.89 billion in TVL. The Ethereum-based protocol has consistently placed at the top for TVL but had an 8.33% change on a 7-day basis compared to MakerDAO’s 9.53%.
Binance Chain and Solana followed behind Ethereum for the highest TVL with $19.68 billion and $14.86 billion locked, respectively. Arbitrum, however, saw the biggest change as it jumped 18.57% to $2.72 billion in TVL.
Daily transactions have also soared on the DeFi protocols, including PancakeSwap, which runs on the Binance Smart Chain. The network witnessed a rise in active users to above 600,000, with the number of active addresses on the protocol soaring to 2 million.
According to the Q3 report by Genesis, the number of institutions entering the DeFi industry has been growing. There has been an increase in appetite for Ether from large companies to borrow and lend across various decentralized applications (Dapps).
This could also be due to a “significant structural change” in the cryptocurrency market, as retail exchanges started to deleverage. During the second quarter of 2021, several digital asset exchanges limited their leverage offerings, including Binance, which reduced its levels to a maximum of 20x for accounts that have been opened for less than a month.
Genesis further highlighted a decline in the weighting of Bitcoin in its overall portfolio due to the lack of BTC-denominated trading opportunities. While interest in the leading cryptocurrency witnessed a downturn emerging Layer-1 protocols, including Solana, have witnessed a boost in demand, serving as natural liquidity pairs for DeFi yield opportunities.