DeFi faith fuels surge! Total locked assets exceed 15 billion, token prices rebound strongly

The performance of DeFi concepts in the past two months has been less than ideal, with many believing it to be a rehash of the ICO bubble in 2018. However, various data indicate that DeFi does not seem to have been abandoned by the market.

DeFi Total Locked Assets Increase Instead of Decrease

Decentralized Finance (DeFi) saw explosive growth in the second and third quarters of 2020, with a surge in hot money flowing into DeFi tokens due to the liquidity mining craze. However, the performance of the DeFi sector started to decline in the fourth quarter, with diminishing returns from liquidity mining. Additionally, as Bitcoin broke through resistance levels to repeatedly hit new highs this year, funds began to flow back, causing a general decline in DeFi tokens from September to early November. Even the so-called "DeFi Bitcoin," YFI, plummeted from $44,000 to $7,500.

However, this does not mean that DeFi will be engulfed by the tides of time. According to data from DeBank, a DeFi data platform, the total value locked in DeFi protocols on the Ethereum chain is around $15.53 billion, reaching a historical high. The top three protocols are Uniswap with $3.15 billion, Maker with $2.13 billion, and WBTC with $1.89 billion. On the other hand, the total value locked in DeFi veteran projects such as Uniswap, Maker, and Compound has been steadily increasing.

Market Rebounds, DeFi Tokens Show Strong Recovery

In terms of token prices, DeFi tokens have also performed well, especially projects like AAVE, UNI, and SNX, which have mature businesses and a large user base, showing remarkable rebounds. Even YFI, which once dropped below $10,000, bounced back from its $7,500 low to the $18,000 range. According to data from Coingecko, the total market value of the top 100 DeFi tokens was $13 billion on November 1st, and at the time of writing, it had risen to $15.3 billion, an increase of 13%.

Furthermore, as previously reported, Set Protocol announced a new decentralized finance index product, DeFi Pulse Index (DPI), in collaboration with DeFi Pulse. The index has risen by over 60% since November 5th. It is worth noting that during a significant drop in DPI, the market value of DPI did not decrease significantly. This indicates that even during a downturn in DeFi tokens, funds continued to flow in, leading to an increase in DPI issuance, allowing the DPI market value to remain at $13 million.

A New World After the Bubble

Since the cooling of liquidity mining, many have begun to question whether DeFi will become as bubbly as Initial Coin Offerings (ICOs) in the past. However, from the data above, even though token price performance in the past two months has been less than ideal, this is likely just a normal correction after overvaluation due to a large inflow of funds. The market has not given up on the development of this sector. Many teams are still actively optimizing protocols, expanding partnerships, and launching new products. After weathering the storm, DeFi seems to be moving towards a more mature direction.