DeFi summer was one of the best periods in the cryptocurrency sector, but as we can all observe, the DeFi hype is dissipating somehow, yet the total value locked in the various financial protocols are still at an all-time high of $12.5 billion observed. Despite the cooling effect already taking place, the different protocols still find many takers in increasing numbers.
The dominant DeFi projects that have garnered popularity, as well as maximum value locked, include big names such as Uniswap, Maker, and WBTC. Leading yield aggregators like Compound, Aave, yEarn Finance, and Curve topped the list at the beginning of the DeFi boom. The annual returns on yEarn is a strong indicator of DeFi liquidity provider returns in the niche with the annual returns existing in the range of 6%-7%. Curve and yEarn finance pools are also yielding around 10% – 14% while the returns of Ethereum and Bitcoin-based pools are about 1%.
Source: DeFi Pulse
Now the crypto market momentum has reached a new high following a 6-week correction for almost all the tokens related to the industry. The Total Value collateral figure has also reached a record of $12.3 billion as per the figures given by DeFi Pulse. So, this means that the increase recorded by 2000% since this time last year. The huge increase in collateral since last Wednesday also is an indication as a result of ever increasing Ethereum prices because a majority of the DeFi protocols and pools are based on ETH. As per the CoinGecko data and estimates, the market capitalization for DeFi related tokens has also increased by $2 billion in the last few days. All this points out to one single thing which is that a rally could be on the anvil.
Spencer Noon from DTC Capital has labeled this new rally as Bull Phase 2 in his Twitter account. He believes that this will be bigger than the summer’s gains. He also said that the DeFi farmers could have swung back into bitcoin after they had registered gains during the third quarter. He said:
“The likely inflection point for DeFi Bull Phase 2 is the election, where there are multiple outcomes that would be favorable for risk assets. Until then, farmers will sit in BTC because it’s low-maintenance and basically a stablecoin compared to what they were trading this summer.”
Not all the DeFi protocols have made remarkable improvements and growth in the process of DeFi’s massive progression. But despite that, there are huge amounts of collateral that are locked in smart contracts. Uniswap has retained its crown by still being the industry leader with $2.6 billion TVL. Its market share is a whopping 21% which is great considering the number of players in existence. Even in terms of exchange performances, Jack Purdy from Messari believes that DEXs have performed well to eat away the market share of Centralized exchanges. Many protocols are reigning supreme but there are still many who despite gaining consistently are still unable to reach their all-time high.