DeFi Market Rebounds to $50B as Speculators Hunt for Yield

An uptick across Solana-based protocols coupled with more than $700 million in deposits to Blast has fueled growth of the value locked in decentralized finance.

AccessTimeIconDec 5, 2023 at 10:46 a.m. UTC
Updated Jan 24, 2024 at 1:30 a.m. UTC
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  • DeFi's TVL has gained more than $15 billion in six weeks.
  • Rising asset prices coupled with fresh inflows have contributed to the increase.
  • Value on some Solana-based protocols has risen by as much as 120% and newly announced layer-2 platform Blast received more than $700 million in deposits.

The total amount of capital locked or staked across all decentralized finance (DeFi) protocols reached $50 billion on Tuesday for the first time in six months as the value of underlying assets surged and investors sought to secure a yield on their crypto holdings.

Data from DefiLlama shows that since Oct. 13, when the sector was at multiyear lows, the figure has increased by $15 billion.

The search for yield was illustrated last week, when Blast, a newly announced layer 2 project that hopes to go live next year, received more than $700 million in deposits from traders and investors who were unperturbed by the fact that assets cannot be withdrawn until at least March.

Since Oct. 13, ether (ETH), the primary asset used across the DeFi market, has risen by 42%, outpacing the whole DeFi market, which increased by 41%. It's worth noting that a significant portion of DeFi protocols offer yields on stablecoins, which are pegged to traditional fiat currencies like the dollar, euro or sterling.

Transactional volume has also risen: More than $5.4 billion changed hands on a single day last month, the most since March.

The sector experienced a boost earlier this year as a result of Ethereum's shift to a proof-of-stake blockchain, which meant holders could stake ether to become a network validator and receive rewards. The transition spurred the liquid staking market, led by the likes of Lido and RocketPool, which combined are responsible for 45% of DeFi's total value locked (TVL).

Lido currently offers an annual yield of 3.7% whilst RocketPool offers 3.92%. Liquid staking is a form of derivative that allows investors to generate a yield from staking ether whilst receiving a token that can be used elsewhere across the DeFi ecosystem.

TVL on Solana-based protocols marginfi, Jito and Marinade Finance has jumped by between 60% and 120% in the past 30 days as institutional interest around Solana continues to mount. Grayscale's Solana Trust traded at an 869% premium last month, demonstrating significant demand from the institutional market.

Jito, Solana's liquid staking protocol, offers stakers a yield of 6.96%, a level that led to $327 million in inflows since Oct. 13.

Edited by Sheldon Reback.

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Oliver Knight

Oliver Knight is a CoinDesk reporter based between London and Lisbon. He does not own any crypto.


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