Sunday, August 14

DeFi TVL hits new highs as Metaverse tokens show signs of exhaustion

Sentiment in the cryptocurrency market rose again on November 29 as the recent drop in the “extreme fear” zone in the Crypto Fear and Greed index improved slightly after Bitcoin (BTC) rallied above support of $ 57,000, raising the highest index. in the “fear” zone.

Index of fear and greed. Source:

Despite the general feelings of “fear” and “extreme fear” that have been dominating the market since the index began to decline on November 16, various subsectors of the cryptocurrency market, including projects related to Metaverse and protocols of games, have experienced breakouts to new all-time highs.

The rapid gains seen in these projects have led to some concern that the Metaverse and gaming sectors could see a significant pullback in the near term if traders turn a profit and expect more sustainable price levels, leading many to speculate. on which market sector will be the next to see bullish momentum and price gains.

A deeper dive into the available data shows that the market’s decentralized finance (DeFi) sector has been steadily gaining momentum in recent months as the total value locked in DeFi rose to a new all-time high of $ 276 , 92 billion on November 1. 9 and currently stands at $ 265.74 billion.

Total value locked in DeFi. Source: Defi Llama

The rise in TVL comes as new protocols continue to be rolled out on Ethereum (ETH) -compliant networks like Fantom and layer two solutions like Arbitrum that offer users the ability to transact in a lower fee environment.

Related: Ethereum layer-two TVL hits all-time high

DEX activity recovers

Another sign that activity on DeFi is on the rise has been the spike in trading volume on decentralized exchanges (DEX) such as Uniswap and SushiSwap, which have gradually seen an increase in activity since the market bottomed out at mid July.

Total volume traded on decentralized exchanges. Source: Token Terminal

As seen in the chart above, the volume traded on the upper DEXs is now consistently back at levels similar to what was seen during the bull market in the first half of 2021.

One of the most notable changes has been the addition of activity from dYdX, a decentralized layer two perpetual and futures exchange that surprised early users in September when it launched its new governance token to users who had previously engaged with. the protocol.

Since its launch, dYdX has become the go-to option for decentralized options trading in the cryptocurrency market and, at one point, its trading activity outpaced spot trading on the leading US-based cryptocurrency exchange. USA, Coinbase.

One final piece of evidence showing that activity on DeFi is on the rise along with the underlying sentiment for where the market is going is in the volume lent on major lending platforms, which is now near an all-time high of $ 35 billion. .

Volume loaned on credit platforms. Source: Token Terminal

This indicates that cryptocurrencies are locking their tokens as collateral for loans that can be used further in cryptocurrency and DeFi-related activity, and suggests that many expect a continuation of the bull market as the ecosystem prepares to close in 2021 and Start 2022 on the right foot.

The overall cryptocurrency market capitalization is now $ 2.63 trillion and Bitcoin’s dominance rate is 42.1%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trade move involves risk, you should do your own research when making a decision.