DeFi flashes early revival signs as retail and institutional inflows trickle in

Published at: Feb. 12, 2022

Decentralized finance (DeFi) has had a rough go so far in 2022, and data from Messari shows the top ten-ranked DeFi assets currently down between 10% to 50% since the start of the year.

A positive is, the situation may change soon as funds have began to flow back into the DeFi ecosystem following a month of declines as data shows institutional and retail funds returning to crypto markets.

Data from Defi Llama shows that the total value locked in all of DeFi platforms has climbed to $211.1 billion on Feb. 11, up from a low of $185.14 billion on Jan. 31

A closer look at the individual protocols that contribute to the total TVL shows that the biggest drawdowns in TVL over the past 30 days were in stablecoin-focused protocols like Curve (CRV) and Convex Finance (CVX), which appeared to suffer from the collateral damage of popular rebase projects like OlympusDAO (OHM) and Wonderland (TIME) imploding.

Projects that were closely integrated with Curve also saw significant outflows, with Yearn.Finance experiencing a 28.57% decline in TVL and Abracadabra.money seeing its TVL fall by 46.3% amid the controversy surrounding members of its development team.

Every crisis presents an opportunity, however, and in this instance it is the decentralized stablecoin protocol Frax (FXS) that has benefited from the stablecoin shakeup. The protocol's TVL has increased 35.81% over the past 30-days.

DEX activity remains elevated

Aside from the total value locked metric, which has its own strengths and weaknesses, activity across DeFi applications continues to increase year over year with the volume transacted on decentralized exchanges (DEX) over the past three months ranking among the highest recorded historical volumes.

Uniswap (UNI) remains the dominant DEX with 77.9% of the volume transacted, followed by 7.8% for Curve and 5.6% for SushiSwap (SUSHI).

According to data from TokenTerminal, the three leading protocols by gross merchandise value (GMV) over the past three days, which a metric that measures the total value of sales over a certain period of time, have been Uniswap, dYdX and the SpookySwap.

DAUs are on the rise

A final metric pointing to the ongoing adoption of decentralized finance is the total number of DeFi users, a figure that has continued to steadily increase according to data from Dune Analytics.

As of Feb. 10, there were 4,363,238 unique addresses that interacted with a DeFi application, representing a year-over-year increase of more than 300% from the 1,369,368 wallets registered on Feb. 10, 2021.

A closer look at the breakdown of which applications experience the most users indicates that Uniswap once again dominates the field with 3,608,951unique wallets interacting with the DEX protocol, followed by 1Inch with 1,108,570.

The overall cryptocurrency market cap now stands at $1.996 trillion and Bitcoin’s dominance rate is 41.9%.

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