DeFi Bounces Back: Highest Volume Since March After 30-Month Low

Over the span of just two weeks, the total value locked in decentralized finance (DeFi) protocols has witnessed a substantial surge, leaping from $35.8 billion to an impressive $42 billion. This surge comes after a recent period of decline, marking the highest point in three months, as indicated by data from DefiLlama.

DeFi market volume and TVL (DefiLlama) 

The resurgence of the DeFi market can be attributed to two key factors: the appreciating value of assets and a fresh influx of participants seeking yield through staking and lending activities.

During the past fortnight, Ether (ETH), the cornerstone asset in the DeFi ecosystem, saw a noteworthy rally from $1,590 to $1,810. Simultaneously, tokens like lido (LDO) and aave (AAVE) experienced substantial upward movements, posting gains of 25% and 34% respectively.

Accompanying the surge in asset prices, the transactional volume within DeFi protocols hit its highest point since March, registering a robust $4.4 billion on October 24th, as reported by DefiLlama.

Solana's premier lending protocol, Marinade, witnessed an impressive 120% surge in total value locked (TVL) this month. This surge was catalyzed by the launch of its native staking product, offering an enticing 8.15% Annual Percentage Yield (APY) to complement its existing 7.7% rate on liquid staking. Marinade's competitor, Jito, also experienced a significant rise, boasting a TVL of $168 million—a 190% increase in the same period.

Within the Ethereum ecosystem, platforms like Enzyme Finance, Spark, and Stader saw their capital surge by impressive margins, ranging between 37% and 55%. This surge in TVL outpaced the rise in asset prices, highlighting a noteworthy influx of fresh capital.

Newly introduced layer one blockchains, Sui and Aptos, also witnessed notable growth this month. TVL on Sui experienced a surge from $34 million to $75 million. Aptos, driven by heightened activity on the lending platform Thala, also achieved a TVL milestone of $75 million this month.

Despite the fruitful month for DeFi, risks persist within the sector. Even a slight dip in the price of ETH could trigger significant on-chain liquidations. Currently, there is a $76.2 million position on Aave that stands to be liquidated if ETH drops below $1,777, with over $100 million poised for liquidation if the price sees a 20% decline.

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