On the back of the incredible crypto market recovery and the boom in NFT markets, the DeFi market has grown 18% in October.
As September ended, the cryptocurrency markets recovered from the so-called “September curse” handsomely to hit a market capitalization of $2.32 trillion. The decentralized finance (DeFi) market has been an integral part of this growth. The total value locked (TVL) in DeFi protocols grew more than 20%, from $113.5 billion on Sept. 28 to hit $137 billion on Oct. 6, as per data from Dappradar.
Even the Bank of America (BoA) — a global banking giant — has revealed its bullish outlook on DeFi and nonfungible tokens (NFTs). In an Oct. 4 report by BofA Securities — a subsidiary of BoA — the firm evaluated the scope of crypto assets beyond “just bitcoin.”
(Bitcoin’s strength) can execute automated programs (smart“Tokens such as Ether, Cardano, Solana, and others with blockchains that can do more than securely record payments contracts) such as making a payment after an event. his is Decentralized Finance (DeFi) where smart contracts automate manual processes of traditional finance”, the report states.
It also compared tokenization to the early days of the internet and spoke of the decentralization and tokenization of many aspects of finance as it currently exists.
Cointelegraph discussed the rapid expansion of the DeFi markets with Johnny Kyu, the CEO of crypto exchange KuCoin. He explained:
“The popularity of the DeFi market is growing as more people are starting to understand that a smart contract can be a worthy alternative to a traditional loan or bank deposit. The amount of funds locked in DeFi reflects market adoption among private investors who are moving their money from the traditional financial system to the decentralized industry.”
While the DeFi sector's TVL has seen a bump from the massive price increase of various projects' native tokens, Kyu also attributes the growth to the attractive rates offered by DeFi platforms.
A recent report by Dappradar revealed that the TVL in the industry gained 53.45% quarter-on-quarter in Q3 2021. In September, the unique active wallets (UAW) linked to any decentralized application hit a daily average of 1.7 million. The quarterly average UAW is 1.54 million.
Martinelli said that greater institutional involvement is driving up the TVLs in well-established “safe” protocols. Furthermore, the large yields offered by DeFi platforms are shifting retail investors from centralized platforms into the DeFi space. This rising adoption across various categories of investors is enabling DeFi to move to the next phase of its growth.
The next generation
The continued popularity of NFTs is also a significant driver of this growth. The aforementioned report by Dappradar mentioned that the NFT space has seen exponential growth as well. In Q3, the market generated over $10.67 billion in trading volumes, thus entailing a 704% increase from the second quarter and a massive 38,060% increase year-on-year.
While earlier in the year, most of the major NFT sales were on the Ethereum blockchain, now blockchains like Binance Smart Chain, Solana, Polygon, Avalanche and Tezos are beginning to catch up. Recently, an NFT from the biggest collection in the Solana ecosystem, Solana Monkey Business, sold for 13,027 Solana (SOL), currently worth more than $2.1 million, breaking the platform’s previous NFT record.
The source: Cointelegraph