TL;DR
- Active Loans Surge: DeFi is making a comeback, with active loans reaching approximately $13.3 billion—the highest since early 2022. This metric reflects market health and suggests increased leverage, a potential sign of a bull market.
- Total Value Locked (TVL) Rebounds: After an 80% decline in 2023, DeFi’s TVL has rebounded impressively to around $96.5 billion. In the first half of 2024, it peaked at $109 billion, signaling renewed interest.
- Protocols Highlights: Aerodrome: A user-friendly DeFi protocol built on zkSync, simplifying borrowing and lending. Ether.fi: Focused on Ethereum staking, it caters to both experienced and novice users as Ethereum transitions to Proof-of-Stake.
DeFi appears to be experiencing a resurgence, with key indicators pointing to growth after a period of decline. In a recent report by crypto market analytics platform Token Terminal, active loans in the DeFi space have climbed to approximately $13.3 billion, a level not seen since early 2022.
Protocols that have seen the biggest increase in new tokenholders over the past 7d: pic.twitter.com/bUnR8tL2vr
— Token Terminal (@tokenterminal) July 31, 2024
This metric is crucial for assessing DeFi participation and overall market health. During the 2021 crypto bull run, DeFi active loans peaked at $22.2 billion, coinciding with Bitcoin and Ethereum reaching impressive price levels.
However, the figure dropped significantly to around $10 billion by March 2022 and further to $3.1 billion in January 2023. The recent recovery suggests a potential increase in leverage, often seen as a leading indicator of a bull market.
Total Value Locked (TVL) Bounces Back
DeFi’s total value locked (TVL) also suffered a dramatic decline last year, falling 80% from its November 2021 peak of $180 billion to approximately $37 billion by October 2023.
The industry has experienced an impressive rebound, with the total value locked (TVL) currently around $96.5 billion, as reported by DefiLlama. In the first half of 2024, DeFi TVL saw a significant increase, reaching a high of $109 billion in June.
Aerodrome Takes Off: Streamlined Borrowing and Lending
Aerodrome, a relatively new DeFi protocol built on the zkSync scaling solution, has seen a significant uptick in users. Its popularity can be attributed to its focus on a streamlined borrowing and lending experience.
Unlike traditional DeFi protocols with complex interfaces, Aerodrome boasts a user-friendly interface that simplifies the process of depositing, borrowing, and earning interest on crypto assets. Additionally, its integration with zkSync allows for faster transaction speeds and lower fees, further enhancing its appeal to users.
Ether.fi Caters to Stakers: Focus on Ethereum 2.0 Rewards
Ether.fi, a platform dedicated to staking Ethereum (ETH), has also witnessed a rise in user engagement. With the upcoming Ethereum Merge transitioning the network to Proof-of-Stake (PoS), Ether.fi positions itself as a user-friendly solution for earning rewards from staking ETH.
The platform offers a variety of staking options, including solo staking and pool staking, catering to both experienced and novice users. Its focus on a single asset, ETH, simplifies the decision-making process for users interested in participating in Ethereum’s PoS consensus mechanism.
Bear Market for DeFi Tokens
Even though there are some positive trends, the majority of DeFi tokens are still stuck in a bear market. CoinGecko reports that DeFi assets only make up 3.4% of the total market capitalization.
Native tokens for prominent DeFi platforms like Aave, Curve Finance (CRV), and Uniswap are still down more than 80% from their all-time highs, even though the broader crypto market is down only 22% from its 2021 peak.
Ethereum’s recent launch of spot Ether exchange-traded funds (ETFs) in the United States drove an impressive $2.2 billion in inflows, despite the challenges faced by DeFi tokens.
In summary, DeFi is showing signs of resilience and growth, but the road ahead remains dynamic and volatile. Investors and users should keep a close eye on developments in this ever-evolving landscape.
