The increase follows almost two years of down-shifting, “thus creating some optimism that the worst might be behind us in terms of the medium-term trajectory for DeFi/NFT activity, “ the report said.
“While we do not doubt this recent revival in DeFi/NFT activity is a positive sign, we believe it is too early to be getting excited about it,” analysts led by Nikolaos Panigirtzoglou wrote.
DeFi is an umbrella term used for lending, trading and other financial activities carried out on a blockchain. NFTs are digital assets on a blockchain that represent ownership of virtual or physical items and can be sold or traded
Additionally, ether (ETH) has underperformed other cryptocurrencies, so measuring total value locked (TVL) in ETH terms would mechanically show some improvement, as these other digital assets have gained more in recent months, the authors wrote.
Still, the rise of new chains and DeFi protocols such as Aptos, SUI, Pulsechain, Tenet, SEI and Celestia in the past year is encouraging, the bank said. NFTs have also benefited from the emergence of Bitcoin ordinals.
The Ethereum blockchain does not appear to have profited from this recent revival in DeFi and NFT activity, and faces issues related to its “network scalability, low transaction speeds and higher fees,” and increased competition from other layer-1 chains, the report said.
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