After remaining above $40 billion for much of 2023, the total value locked in decentralized finance, or defi, fell below the threshold on August 17, reaching $37.9 billion by August 22. Additionally, from August 13, the top 100 DeFi tokens have decreased by $1.74 billion in value over nine days.
Defi’s Rocky August: Value Retreats as Major Tokens and Platforms Face Declines
Five days back, when bitcoin (BTC) tumbled below the $26,000 mark, numerous alternative cryptocurrencies witnessed substantial declines. This shook the defi sector, causing the total value locked (TVL) to retreat under the $40 billion range, touching $37.965 billion. Since Aug. 17, it has remained under this benchmark and shed 0.92% in the past day.
Come Tuesday, Lido Finance remains the predominant defi protocol, boasting a TVL of approximately $13.916 billion. This represents 36.65% of the sum spanning 2,845 defi protocols. Yet, Lido’s TVL experienced a 7.78% contraction this week, mirroring a trend seen across the top 16 defi protocols by TVL. Compound Finance faced the steepest decline, with a 15.02% drop in a week, closely trailed by Makerdao’s 14.20% setback.
Assessing TVL by chains, Ethereum dominates, holding 57.75% market share, which translates to $21.823 billion spread over 892 distinct defi protocols. Tron chases Ethereum with its $5.20 billion, accounting for 13.77% of the collective $37.9 billion, distributed among 25 Tron-centric defi platforms. Binance Smart Chain (BSC) secures the third spot with $2.817 billion or 7.45%, succeeded in order by Arbitrum, Polygon, Optimism, and Avalanche.
A contrast from nine days prior shows the top 100 defi tokens, gauged by market cap, had a valuation of $45.08 billion. Today, that figure has dwindled to $43.34 billion. About $1.74 billion vanished from this top defi token bracket, with notable downturns observed in uniswap (-23.7%), the graph (-14.3%), aave (-14.9%), and synthetix network (-14.8%).
Linear and sushi encountered even sharper falls, with linear (LINA) plummeting 29.8% and sushi (SUSHI) dropping 25.5%. Tuesday, the combined global trade volume for these 100 Defi tokens is roughly $34.12 billion. Defi has grappled with instability for a stretch, witnessing a sharp erosion in both value and investor trust, especially post the Terra ecosystem collapse.
The downturn of FTX and the billions pilfered in defi breaches, scams, rug pulls, and hacks have further tainted its appeal, painting it as perilous and less enticing to many. Nonetheless, defi proponents are unwavering, asserting that defi’s potential to revolutionize the digital financial landscape by democratizing access and redistributing authority from centralized structures to individuals remains intact.
What do you think about the state of the decentralized finance economy today? Do you expect it to drop more or do you envision a rebound soon? Share your thoughts and opinions about this subject in the comments section below.
