- The DeFI market’s revival is based on flesh capital inflow and increasing asset prices
- Even the smallest drop in the price of ether would trigger significant on-chain liquidations
The total value locked (TVL) of all decentralized finance (DeFi) protocols has reached a six-month peak of $42 billion after hitting the lowest point in more than two years two weeks ago, according to DefiLlama data, cited by CoinDesk.
The DeFI market’s revival is based on flesh capital inflow and increasing asset prices. The inflow aims to generate yield through staking and lending.
Ether, Lido, Aave have gained over the past 2 weeks
Most DeFi assets are based on ether (ETH), whose increase accounts for the success. The second-biggest coin by market cap has risen from $1,590 to $1,810 in the past two weeks. Aave and Lido have gained 34% and 25% respectively.
Transaction volume hit $4.4B on Oct. 24
Asset prices weren’t the only factor that registered growth. DeFi protocol transactional volume reached a more than 6-month peak, hitting $4.4 billion on Oct. 24, according to DefiLlama.
Lending protocols contributed the most
This increase was largely accounted for by Marinade, Solana’s biggest lending protocol. It saw a 120% increase in total value locked (TVL) after its native staking product was released this month. Alongside its 7.7% rate on liquid staking, the product offers yields of 8.15% APY.
Jito, Marinade’s rival protocol, added 190% to its TVL in the same period, reaching $168 million.
On Ethereum, the amounts of capital on Stader, Spark, and Enzyme Finance all increased by rates in the range from 37% to 55%, outpacing the asset price increase to illustrate fresh inflows.
L1 blockchains up $40M
In October, recently released layer one blockchains Aptos and Sui also demonstrated impressive growth. Aptos’ overall TVL reached $75 million, propelled by dynamic activity on Thala. TVL on Sui increased by more than $40 million, from $34 million to $75 million.
Remaining risks
The DeFi sector remains risky despite the promising data above. Even the smallest drop in the price of ether would trigger significant on-chain liquidations. At present, the position of $76.2 million on Aave would be liquidated if ETH keeps increasing. If its price drops by 20%, the amount to be liquidated would exceed $100 million.
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