Back on March 13th, when Total Locked Value in DeFi plummeted down to $562 million from an all-time high of $1.28 billion in February, many expected it to be the beginning of the end for Decentralized Finance tokens. Market commentators believed that the hype has fizzled out and DeFi is going to lose its market. Little did they know that the DeFi industry was on its way to exponential growth in 2020.
According to DeFi pulse, the total value locked in DeFi has reached a whopping $3.5 billion at press time, but a majority of the growth came over the span of the last 30-45 days.
On June 16th, the TVL under DeFi was close to $1.04 billion but since then, the market cap has improved by $2.5 billion, leading to its all-time high TVL at the time of writing.
The top DeFi tokens incurring high locked USD value are Maker, Aave, Compound, Synthetix, and Curve Finance. Over the past day, Aave and Curve Finance tokens have resulted in a hike of 17.61 and 16.17 percent, taking their locked value to $609 million and $385 million respectively.
Why is DeFi pumping so much?
Now, even though DeFi is based on Ethereum, DeFi’s immense market capture did not lead to an increase in Ether’s valuation. It is solely because Ether’s only functionality in the DeFi space is to be utilized for gas transactions. Other than that, the functionality of DeFi and Ether is largely independent.
DeFi’s massive increment over the past month has been due to the introduction of Yield Farming. This new form of decentralized lending was first launched by Compound’s governance token, which initially took DeFi’s TVL over $2 billion. At the time of writing, Compound had over $553 million in TVL.
Now, continuing on Compound’s blueprint, iEarn Finance or Curve Finance ended up launching its governance token and they released 1000 percent annual percentage yield or API for their investors, which currently makes it the highest-earning pool in DeFi.
Ether’s value continues to lag behind
As reported previously, the high usage of DeFi had led to an explosion of Ethereum transaction fees that were last observed in October 2018. With Ether lagging on its own-parent chain, many were speculating that the ERC-2- tokens may become of secondary importance on Ethereum if DeFi tokens continued to attract such high-levels of interest.