DeFi value is now more than $200 billion
These are extremely exciting times to be involved in cryptocurrency, and equally exciting times to be involved in decentralized finance (DeFi).
This week, the cryptocurrency market arrived at a combined market capitalization of $2.3 trillion, which is an all time high, however the DeFi projects that are built on the blockchain technology that underpins cryptocurrency are also rising massively in terms of the amount invested in them.
For the first time ever, the combined value invested in DeFi projects passed $200 billion today, with a large amount of funds having been poured into various new protocols and blockchain technology projects in October thus far.
There are as many as ten blockchain-related DeFi projects which are currently garnering the interest of enthusiastic investors, with Curve, Sushiswap, Balancer and Bancor being among them, and perhaps more interestingly Uniswap along with Uniswap V3 which is of great importance to the development of DeFi itself lately largely because of the diverse functionality Uniswap V3 adds to the ecosystem.
The whole world of DeFi has become even more of a multi-faceted rival to the traditional and even institutional financial markets structure, with the arrival of the launch of the official production version of the ‘layer two’ (L2) scaling protocol for Uniswap v3 on Optimistic Ethereum (OE)’s mainnet just a couple of months ago.
Back in May 2021, the imminent launch of Uniswap v3 began to be mooted via various sources close to the matter. One of the main advancements with the introduction of Uniswap v3 is that liquidity providers can provide liquidity with up to 4000x capital efficiency relative to Uniswap v2, earning higher returns on their capital, and given that this is an intrinsic part of the incredibly empowering and sophisticated DeFi world, it would require a decentralized approach unless a user has access to a L2 via a fiat on-ramp such as CoinMetro.
Given that these protocols are now in their prime, the total value locked in them standing at $200 billion shows the absolute confidence in DeFi as the future shape of the digital financial world.
Perhaps an interesting circumstance is that Bitcoin as an actual digital currency has been rallying to over $57,200 in value, whereas Ethereum has remained relatively stagnant this week, however when looking at the investment in these as DeFi instruments, and using the Total Value Locked (TVL) metric, Ethereum has seen a TVL increase of 1.65% during the last seven days.
It is clear that Ethereum is viewed by many enthusiasts as a highly versatile cryptocurrency, with a technological topography that is very much capable of shaping the world of transactions to come.
Its smart contract capability, with use cases ranging from digital identity to financial data recording, and from supply chain management to clinical trials, is of huge importance to the development of financial and transactional process, and the aforementioned L2 scaling capability is important to the development of the blockchain world in general.
For this reason, TVL in Ethereum should be metric to consider, as well as its value as a cryptocurrency.
Remarkably, since January 1 2021, the DeFi TVL across various blockchains has risen almost 855% from $21.4 billion to today’s $204 billion.
This is a clear indicator as to where the investment in financial technology is going, and cryptocurrency is absolutely where it’s at.