In brief

  • Several of the most popular DeFi protocol have seen a surge in locked value.
  • Total value locked was $1 billion less than a month ago.
  • Compound beginning to realize the dream of decentralized governance has been a catalyst.

DeFi is growing by leaps and bounds, and today, the nascent industry has hit a new milestone. The total value locked (TVL) in decentralized finance has doubled to $2 billion in just over three weeks, as measured by DeFi Pulse

The rapid accumulation started on June 15, the same day Compound began distributions of the COMP governance token, allowing community members to control the fate of the decentralized money lending service. It appears the relatively smooth roll out of distributed governance for one of DeFi’s foundational protocols has fostered new confidence in DeFi users, flooding the market with locked deposits that show no signs of slowing down.

Total value locked represents the amount of liquidity being made available to borrowers and other users in different DeFi apps. As TVL increases, the capacity for many DeFi applications to service a greater number of users at a favorable interest rate or swap fee goes up. Favorable rates draw in more users, who in turn may add liquidity of their own to support the protocols.

Compound currently holds the top spot for total locked assets, shooting up from less than $100 million on June 14 to more than $660 million at time of writing, marking an all-time high and an increase of more than 575% in just three weeks. Maker, the DAI stablecoin loan and savings protocol has seen its total value locked on a more recent upswing, increasing nearly 30% between June 30 and July 6 to mark a new all-time high.

While Ethereum dominates the DeFi space, representing the majority of the value locked as measured by DeFi Pulse, it's worth noting that Bitcoin also contributes to the total. DeFi Pulse ranks the Lightning Network as 14th on the list of DeFi protocols, accounting for just over $9 million in value locked across DeFi apps.

Another factor contributing to the recent $2 billion milestone is the addition of Flexa to the DeFi Pulse rankings. Flexa uses crypto to facilitate digital payments and is already ranked in the top 10 for total value locked, currently worth more than $60 million. With Flexa on board, Ethereum is now the most valuable platform in all the DeFi Pulse categories, including payments, lending, derivatives, and more.

Another notable TVL run-up has come from Synthetix, a protocol for generating on-chain derivatives that track the value of various assets like ETH or gold. Synthetix TVL has increased nearly 170% since June 1, marking new all time highs almost daily.

As DeFi protocols continue to work through their growing pains, how long before the value locked in DeFi doubles again?

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.