Decentralized finance (DeFi) collateral has been increasing since the beginning of the year. The move has mirrored the crypto market rally as confidence slowly returns.
The dollar amount of collateral locked in DeFi protocols has topped $50 billion for the first time in ten weeks. Furthermore, the total value locked (TVL) is up almost 20% since the beginning of the year.
According to DeFiLlama, TVL is currently at $52.8 billion, its highest level since Nov. 9. Most major DeFi protocols have seen double-digit gains in collateral over the past seven days. Since its cycle low on Jan. 1, around $8.4 billion has returned to the DeFi ecosystem.
However, much of this can be attributed to gains in the underlying crypto assets as markets rally. It should also be noted that DeFi TVL was still 75% down from its peak level in December 2021.
Liquid Staking Leading DeFi
Aside from increasing collateral values, liquid staking derivatives have been driving markets. Lido now has the largest DeFi market share with 14.75% dominance. Furthermore, it is accelerating away from the former king of DeFi, MakerDAO, which has a share of 13.25%.
As reported by BeInCrypto, liquid staking narratives are driving demand for Lido and similar services. This is likely to continue in the run-up to the Shanghai upgrade, which will gradually release staked ETH.
On Jan. 17, researcher ‘ViktorDeFi’ said that DeFi Prediction Markets are “arguably the most underrated crypto theses for 2023.”
Prediction markets are speculative marketplaces that allow users to make and trade predictions on future events. They can be for real-world events such as sports results, elections, company product sales, etc.
He used a few examples, such as Polymarket, Azuro, and Zeitgeist to demonstrate increasing growth for prediction-based protocols.
Algorand TVL Surging
DeFiLlama also reported that Algorand TVL has spiked over the past week, surging 123%. Algorand is a high-throughput blockchain network with an emphasis on decentralization and scalability.
It currently has $180 million in TVL, with five of the top six leading DeFi protocols on the network having triple-digit gains over the past week. AlgoFi, Folks Finance, the Pact DEX, and GARD have driven major momentum for the ecosystem.
Ethereum is still the industry standard, with a market share of almost 60% and a TVL of $31.5 billion.
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