DeFi
Nearly $200 billion worth of cryptocurrencies invested in DeFi
Decentralized Finance (Challenge) The sector has seen a significant influx of capital, with many cryptocurrencies experiences price increases as investors lock in value in various Web3 protocols.
According to a report According to blockchain analytics firm DappRadar, the total value locked (TVL) in DeFi applications soared to $192 billion in May, marking the highest level since February 2022.
Despite this increase in TVL, the number of unique active wallets (UAWs) involved in DeFi decreased by 21%, indicating a shrinking user base. DappRadar attributed TVL’s growth to speculative trading, driven by anticipation of Ethereum potential (ETH) exchange traded fund (ETF). The report noted:
“DeFi UAW was down, meaning most trading was speculative based on the ETH ETF, and likely more trading took place on CEXs.”
Total DeFi value locked. Source: DappRadar
Cryptocurrencies locked in DeFi applications increased by 17% in value in May, mainly due to the rising prices of Ether and other tokens. Ethereum dominated the DeFi market, holding $130 billion, or 68% of the total TVL. Solana (GROUND) followed with $10.9 billion, representing 5.7% of the total and reflecting a 14% increase from the previous month.
Data from DefiLlama showed that 24-hour trading volumes on decentralized exchanges increased from $1.7 billion to $5.1 billion between August 2023 and June 7, 2024.
This increase likely led to higher returns for liquidity providers and lenders, incentivizing additional crypto deposits on DeFi platforms. This period also saw significant discussions around Bitcoin (BTC) and ether AND F.
Broader Web3 Market Trends
While DeFi saw a decline in UAW, other Web3 sectors saw growth. THE gaming sector recorded more than 3 million active users, an increase of 7.5% from the previous month. NFT Marketplace users increased 11% to 1.52 million UAW, and Web3 social media apps saw a 29% increase to 1.92 million UAW. As of June 6, the total number of UAW Web3 reached 10.4 million.
Performance on blockchain networks
NEAR protocol (CLOSE) continues to dominate blockchain performance, thanks to popular Dpps like HOT Game and Kai-Ching.
Polygon (MATIC) follows with its robust gaming ecosystem. Arbitrum (ARB) became the top performer this month, with a 122% increase in UAW thanks to social DApp UXLINK.
DeFi’s TVL has maintained a strong upward trajectory since the start of the year. Ethereum remains the dominant force in DeFi, followed by Solana, which has benefited from increased memecoin trading and DeFi activity. Merlin also stood out by becoming the largest Bitcoin sidechain.
Nonetheless, investors should be aware of the still experimental nature of DeFi and invest with caution.
Disclaimer: The content of this site should not be considered investment advice. The investment is speculative. When you invest, your capital is at risk.