DeFi on Ethereum has been left in the cold after a disastrous 2022. Due to the rapidity with which the emerging field of decentralized finance overtook the market, the third quarter of 2020 came to be known as “DeFi Summer” in the crypto sphere.
Three summers later, it was safe to establish that the glory of bygone days was nonexistent in the 2023 version. From a high of around $180 billion in November 2021 to the current $40 billion, the emerging financial paradigm has lost its sheen with a decrease of almost 78%.
But things seem to be changing for the better, as a recent analysis of Ethereum’s Total Value Locked [TVL] suggests signs of improvement. The TVL has risen to $41.5 billion from a low of $40.09 billion last week, according to data from IntotheBlock. This demonstrates the resilience and potential of the ecosystem, reflecting renewed interest and activity.
According to leading analytics firm Glassnode, two coins from the Ethereum ecosystem are paving the way for a new rebound in decentralized finance. The stablecoin governance token Maker [MKR] and the native coin of the smart contract DeFi protocol Compound [COMP] stand out as the two tokens that serve as the driving force of the trend.
However, Glassnode credits the assets’ excellent success to recent fundamental changes in the two crypto projects rather than general market pressures.
Ethereum DeFi Primary Drivers- COMP, MKR
For instance, Robert Leshner, the departing CEO of Compound, announced on June 28 that the company would be launching a new initiative that will bring regulated finance to blockchain networks. The COMP token quickly increased by almost 80% in just one week after that.
At about the same time, MakerDAO launched its Smart Burn Engine, a program for buying back MKR that offered the possibility of selling $7 million worth of MKR in a single month. The token’s price rose as a result of the debut, rising 43% week over week.
Furthermore, Messari’s research has shown a rise in market share for decentralized exchanges [DEXes] compared to their centralized competitors.
By examining the DEX vs. CEX exchange flows for the top eight DeFi tokens, we can see a renewed interest in DEX activity. The relative share of volume traded on DEXs has increased from 3.75% at the beginning of June to 29.2% today, close to the highs seen during the second half of 2022.