Investment in Decentralized Finance (DeFi) slowed down since summer 2021. However, the hottest new sub-section of the crypto industry has started showing signs of increased activity again. In the last week, $1.32 billion were added to DeFi protocols.
DeFi picks up again
DeFi protocols have added over $1.32 billion to their smart contracts since last Saturday. According to DeFi Pulse, the total value locked into DeFi contracts has now increased from $11.16 billion to $12.48 billion. While the DeFi sector is yet to go back to its summer highs, there is still investor interest in these non-custodial financial products. Overall trends are showing a slowdown in the sector.
A majority of the $12.48 billion locked in DeFi was invested in 2002. The Ethereum network has witnessed the majority of DeFi activity as nearly all of DeFi contracts are built upon this network. At least half of the value is locked in the top three DeFi projects- Uniswap, Maker and Wrapped Bitcoin.
As the interest in DeFi projects is rising, so is the price of the related coins. For instance, the price of yearn.finance has increased by 32%. According to CoinMarketCap, the value of one YFI token has now gone up to $14,275.33. The price of Aave and Chainlink has increased by 15.13% and 7%.
Why is DeFi gaining ground?
DeFi opened a new world of opportunity for investors looking for lucrative returns on their investment. By staking their crypto holdings in DeFi smart contracts, they were promised high returns that provided a new income stream. The craze for DeFi which is connected with ‘yield farming’ reached its peak in summer 2021 and started declining after that.
Many experts predicted that yield farming is a bubble as investors flocked to the market. Several low-quality projects also entered the market. Since then, volume on decentralized exchanges has also decreased significantly.
