DeFi Loans Soar to Two-year Highs
02 Aug, 2024 ● Coin news
Decentralized finance (DeFi) appears to be experiencing a resurgence, with significant metrics like active loans and total value locked (TVL) showing an upward trend since their recent lows in 2023.
According to a July 31 post by crypto market analytics platform Token Terminal on X, “DeFi is waking up again.”
This statement is supported by charts and statistics, including data on active loans, which have climbed back to levels last seen in early 2022, approximately $13.3 billion.
DeFi lending enables investors to loan their crypto holdings to borrowers in exchange for interest.
Lending and borrowing activities are crucial indicators of DeFi participation and overall market health.
Active loans in DeFi peaked during the 2021 crypto bull run at $22.2 billion when Bitcoin and Ether reached $69,000 and $4,800, respectively.
This figure dropped to around $10 billion in March 2022 and further plummeted to $3.1 billion by January 2023.
Since hitting last year's low, DeFi lending has seen a substantial recovery, according to Token Terminal.
The company noted that an increase in active loans might suggest rising leverage, which is a “leading indicator of a bull market.”
The total value locked (TVL) in DeFi also suffered in 2023, falling 80% from its November 2021 peak of $180 billion to about $37 billion by October 2023.
However, the sector has since rebounded by roughly 160%, with TVL now at approximately $96.5 billion, according to DefiLlama.
Additionally, DeFi TVL doubled in the first half of 2024, rising from about $54 billion to a peak of $109 billion in June.
Discussing the sector's overall growth, Synthetix founder Kain Warwick told Cointelegraph, "The infrastructure has been ready for a while, but it is still enthusiasts using DeFi."
Warwick and his team have developed an "on-chain gateway" called Infinex, referred to as the “UX Layer” of DeFi, aimed at facilitating asset bridging between different blockchains.
In a July 30 post on X, Humble Farmer Academy founder Taiki Maeda commented that the sector is nearing a “DeFi renaissance” after more than four years of significant underperformance.
He specifically mentioned DeFi lending platform Aave, which he believes is “poised to outperform” due to the increasing supply of its native stablecoin GHO and the Aave DAO’s efforts to reduce costs and introduce new revenue streams.
Despite these positive developments, CoinGecko data shows that most DeFi-related tokens remain at bear market lows.
This category of crypto assets holds a market capitalization share of just 3.4%.
Native tokens for former DeFi favorites like Aave, Curve DAO, and Uniswap are still down more than 80% from their all-time highs, even though the broader crypto market is only down 22% from its 2021 peak.
Sources:
https://cointelegraph.com/news/defi-is-waking-up-again-active-loans-return-to-2022-levels
https://tokenterminal.com/terminal/metrics/active-loans?v=OTA1NWVl
https://x.com/tokenterminal/status/1818635120695226806
https://twitter.com/TaikiMaeda2/status/1818011789092864132
https://www.coingecko.com/en/categories/decentralized-finance-defi
