DeFi Summer 2.0 Inbound, As TVL And Token Prices Rise

The rise of the decentralized finance (DeFi) ecosystem in 2020, turned out to be one of the biggest events in the crypto sector to date, with many claiming the “DeFi summer” of 2020 imposing uplifting effect on industry leaders like Bitcoin and Ethereum.

Platforms like Uniswap (UNI), SushiSwap (SUSHI), and Aave (AAVE) started out as tightly oriented DeFi token swapping tools but became the bedrock of the ecosystem and a noteworthy player in the crypto sector.

However, the rise of DeFi tokens and platforms was followed by a market crash, which was a market-wide event. Bitcoin’s fall from its all-time high of $64,800 wiped out almost a trillion U.S. dollars from the market capitalization of the crypto sector, DeFi including.

For example, DeFi index perpetual futures contract hit a low of $5,340 on July 20. Since the low, the value of the index has skyrocketed 45% to $7,682. Analysts began looking for a trend reversal, which could ignite the DeFi Summer 2.0.

Indeed, some of DeFi’s most useful metrics suggest a trend reversal. The total value locked (TVL) is an indicator to determine the strength and weakness of a given platform, or of the entire sector. DeFi total TVL, despite still down roughly 30% from its all-time high of $154.91 billion, increased from $3 billion in July 2020 to $111.04 billion by July 2021.

For instance, the DeFi trend reversal managed to push platforms like the Flexa (AMP) protocol and Lido (LDO) up with 68% and 38%, respectively.

Furthermore, token price increases also suggest a DeFi rebound. Projects like LUNA and AMP were among the two biggest price gainers over the past week with increases of 83% and 64%, respectively.

However, daily trading volumes remained relatively flat and below the $2 billion mark for the entire month of July. In contrast, Uniswap made a 17.8% upwards price move, while SushiSwap rose by 21.5% between July 21 and July 27. Also, user activity appears to be on the uptrend, according to data from Dune Analytics.

Source: Dune Analytics 

Another sign of the growing strength of the sector is the continuing increase in the number of new users interacting with DeFi protocols. As much as 2.09 million unique addresses are interacting with DeFi protocols as of July 27, data shows.

Currently, Aave is the DeFi TVL leader, with $12.33 billion in TVL. Aave’s runner-up, Curve has $8.67 billion in TVL, while the top-3 is closed by Compound with $8.41 billion in TVL, according to data from DeFi Pulse.

Aave leads in the lending platforms, while Curve is the top decentralized exchange to date. The leader in DeFi derivatives is Synthetix, with $1.45 billion locked, while Flexa’s popularity increase made the payments platform a leader in its class with $1.62 billion locked.