The USD value of cryptocurrency liquidity locked in the decentralised finance (DeFi) sector hit $35.8 billion. What’s interesting is that the growth came mostly from lesser-known DeFi protocols rather than more established projects
Total Value Locked (TVL) in DeFi
Total Value Locked measures the total value of the tokens that are locked within the DeFi sector the notion being that the higher the locked value in a DeFi project, the better.
Ever since the DeFi sector burst onto the scene back in August 2017, the TVL has skyrocketed. At the end of 2018, TVL in the sector was around $300 million, while the value reached $800 million just a year later. However, the end of 2020 was a record-breaking period as the year closed with around $15 billion locked in decentralised finance projects.
The rate of TVL growth over time has shocked analysts and regular observers alike, leading some to believe that DeFi is in a bubble primed to pop. However, Justin Banon, CEO of Boston Protocol, is of the opinion that the disruption of centralised finance is the catalyst that will continue to drive DeFi growth.
Today’s $35.8 billion valuation represents a growth of 132% in the five weeks since the start of the new year.
At the moment, the top three protocols are Maker, Aave, and Compound, with the Total Value Locked of $6.03 billion, $5.66 billion, and $4.15 billion, respectively. What’s interesting is that all three projects are lending protocols.
Decentralised exchanges make up the next largest category. In this area, Curve Finance, Uniswap, and SushiSwap are ahead of the pack, and have $3.85 billion, $3.67 billion, and $3.13 billion locked, respectively.
The total cryptocurrency market cap pushed to a new all-time high of a whopping $1.3 trillion. A good proportion of this growth came from the performance of DeFi tokens, as well as Ethereum as the platform they are built on, in the past week.