The size of the DeFi market fell by 45% in a month, falling below $48 billion
Decentralized finance offers various advantages over traditional financial services. Most DeFi applications run on the Ethereum blockchain, and work without a centralized management service for the entire system.
Through DeFi lending, users can lend cryptocurrency like a traditional bank with an official currency, and receive interest as a lender. Interest rates are usually more attractive than those of traditional banks, and the barrier to obtaining loans is much lower compared to the traditional system.
According to Defipulse, in June 2020, the size of the DeFi market, measured by the amount of cryptocurrency blocked, was $1.85 billion. By the end of the year, this figure exceeded $16 billion. However, after impressive growth over the past year, the DeFi market has grown sharply in 2021, reaching $46 billion in February. Over the next two months, the number of cryptocurrencies blocked on the DeFi market increased to $64 billion, which is 300% more than since the beginning of the year.
In May, the DeFi market reached a record level, and on May 12, the total amount of blocked cryptocurrencies amounted to $87 billion.
However, July brought a sharp decline: in a month and a half, the size of the DeFi market fell by almost 40 billion. This could be caused by significant changes in the price of almost 100 different cryptocurrencies, which could lead to the departure of investors. Another factor was the increase in the commission for transactions of Ethereum, the main cryptocurrency used in DeFi.
Uniswap and Wrapped Bitcoin are the main capitalizations in DeFi
This year, the market capitalization of Uniswap as the world’s leading DeFi token has grown significantly. After peaking at $22.1 billion in May, Uniswap’s market capitalization fell to about $ 9 billion last week, which is still a significant increase of 310% since the beginning of the year.
Also, the second largest DeFi token, Chainlink has witnessed another trend: its market capitalization has fallen by 10% since the beginning of the year, to $7.3 billion.
The market capitalization of Wrapped Bitcoin, the third largest DeFi token in the world, has grown by 50% over this period, from $4 billion in January to $6 billion last week.
Although it was never planned to have any financial value, the price of the YFI DeFi token soared to more than $38,500 in January, just six months after it was listed. Data from CoinMarketRate shows that this figure exceeded $77,000 in May, and the company’s market capitalization reached $3.2 billion last month. YFI has a limited number of only 36,000 coins, so its price quickly reached the price of Bitcoin.
However, after the collapse of cryptocurrency prices in May, the market capitalization of the YFI token last week fell to just over $1 billion, which is 10% more than at the beginning of the year.