DeFi recovers from COVID crash, retakes $1 billion in total value

In brief

  • DeFi apps have now locked up over $ 1 billion in value within their smart contracts.
  • The total locked value has increased by almost 90% since mid-March.
  • Value in DeFi has grown faster than the US stock market, aided by rapidly rising ETH prices.

The stock market isn’t the only thing racing to recover after the fall of March.

Total value locked (TVL) in DeFi products has passed the $ 1 billion mark, a level that has not been reached since March 7 when concerns about the corona virus led DeFi investors to flee to safer assets. From a low of just $ 531 million on March 16, TVL in decentralized financing grew nearly 89% in less than three months.

It’s a sign of resilience to the DeFi ecosystem, suggesting users return to this emerging blockchain use case.

Last month’s ETH price. Source: TradingView

DeFi TVL peaked at over $ 1.25 billion on February 14, just days before US stocks began to fall from their all-time highs on February 19. In the period of about a month between February 14 and March 16, the total value closed on DeFi decreased by 58%.

During a comparable period from February 19 to March 23, the S&P 500 fell by only 34%. However, since the low in March, US stocks have grown by 42% compared to the nearly 90% expansion of DeFi TVL.

Total value locked (USD) in DeFi. Source: DeFi Pulse

Despite many DeFi applications being built to run on the Ethereum blockchain, during the recent run, ETH was not the locked token of choice. In fact, ETH locks in DeFi products have fallen more than 18% since it hit a record high of $ 3.2 million on February 1.

ETH locked in DeFi. Source: DeFi Pulse

Large influx of liquidity from Bitcoin into DeFi after the Maker protocol voted to open the use of WBTC as collateral for DAI loans was essential to the recent increase in total value lock. And even with a drop in the total amount of ETH stalled in DeFi, ETH’s price recovery since March 12 has more than made up for the difference for net positive growth in TVL.

DeFi has been around for a fraction of the time that programmable blockchains like Ethereum have been around, but increasingly seems to be the killer app crypto has been looking for over a decade to bring decentralized technology to the masses.

Building with developers new Products at a dizzying pace and new updates and integrations have been released seemingly each day, how long do we wait before the next billion flows into DeFi?

Disclaimer

The author’s views and opinions are for informational purposes only and do not constitute financial, investment or other advice.

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