DeFi Total Value Locked at New High After 2,000% Gains on the Year

The crypto market momentum has spilled over into DeFi again following a six-week correction for most tokens related to the industry. The TVL collateral figure has reached a record of $12.3 billion, according to DeFi Pulse, and this milestone means that it has increased by almost 2,000% since this time last year.

Around this time last year #DeFi was catapulting past $500M towards $1B… now that looks so insignificant on this chart. 😅 https://t.co/zqMQAHgdAG pic.twitter.com/d3WMzVaHGR

— DeFi Pulse 🍇 (@defipulse) October 23, 2020

The billion-dollar increase in collateral since last Wednesday could be a result of increasing Ethereum prices, considering most DeFi protocols and pools are based on ETH. According to Coingecko, the market capitalization for DeFi related tokens has increased by $2 billion over the past couple of days, indicating that the rally could be reinitializing.

DeFi Bull Phase 2

DTC Capital’s Spencer Noon has labeled it as a “bull phase 2” that will be much larger than the summer’s gains.

Despite a month that saw most tokens fall 50% or more, #DeFi is *still* at ATHs with its most important indicators:

– TVL: $12.41B
– ERC20 Stablecoins: $14B

Don't listen to the degens who burned out. Phase 2 of this #DeFi bull market will make this summer look like nothing.

— Spencer Noon (@spencernoon) October 22, 2020

He added that DeFi farmers may have pivoted back into bitcoin after making major gains during the third quarter, saying:

“The likely inflection point for DeFi Bull Phase 2 is the election, where there are multiple outcomes that would be favorable for risk assets. Until then, farmers will sit in BTC because it’s low-maintenance and basically a stablecoin compared to what they were trading this summer.”

While those astronomical returns appear to have dwindled for most DeFi protocols, there is still a vast amount of collateral locked up in smart contracts. Uniswap is still the industry leader, according to DeFi Pulse, with $2.6 billion TVL and a 21% market share. Around $2 billion of this is locked into the four UNI earning ETH pools, which will continue to generate rewards until Nov. 17. Messari’s Jack Purdy noted that decentralized exchanges are eating into the market share of their centralized cousins, with as much as 15% of the total trading volume for the third quarter.

DeFi Token Performance Mixed

Many of the DeFi-related tokens that took a big dive over the past two months are starting to register gains again. The majority of them, however, are still way down from their all-time highs.