- DeFi TVL has more than doubled in the last five months.
- The growth this time was primarily led by liquid staking projects.
After entailing significant losses during the bear market, the decentralized finance (DeFi) ecosystem was booming with activity as of this writing.
The total value locked, the barometer of the DeFi market’s overall health, topped $137 billion as of this writing, less than 3% short of its May 2021 highs, according to AMBCrypto’s analysis of DeFiLlama’s data.
While the value of the current deposits was still some way off from the peak recorded in November 2021, the upward trajectory elevated the prospect of a breach sooner or later.
The story of recovery
The emergence of blockchain technologies, the narrative around decentralization, and the historic crypto bull market of 2020-21, played a big part in turbocharging the DeFi economy.
As evident in the graph above, the total amount of cryptocurrency assets locked in DeFi protocols ballooned 100x from the period between June 2020 to July 2020.
The TVL continued to surge as the market value of crypto assets hit ATH later in 2021.
However, events such as stablecoin Terra USD’s [UST] collapse and the downfall of the FTX [FTT] exchange plunged the broader market into a crisis, impacting investments in DeFi protocols.
The TVL tanked to $48 billion in December 2o22, 75% below its ATH.
The DeFi market showed signs of recovery in 2023 as TVL rose 25% until Q3. But the major lift happened from October onwards, as leading crypto coins began their upward march.
Since then, DeFi TVL has more than doubled as of this writing.
New narratives take center stage
As noted by prominent DeFi analyst
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Author: Aniket Verma
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