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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.
Updated Apr 9, 2024, 11:05 p.m. Published Dec 5, 2023, 10:46 a.m.
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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.
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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more than $700 million in deposits from traders and investors who were unperturbed by the fact that assets cannot be withdrawn until at least March.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.
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