The total value locked (TVL) in decentralized finance (DeFi) protocols has reached a new annual high of $52 billion, a milestone achieved in November 2022 before the FTX crash.
This resurgence is particularly noteworthy amid the collapse of crypto companies such as Terra, Three Arrows Capital, and Celsius, leading to significant uncertainty in both centralized and decentralized financial protocols.
Over the past few months, both sectors have shown signs of recovery. In the case of DeFi, the TVL of protocols has increased from approximately $38 billion at the beginning of 2023 to the annual high of $52 billion, marking a 36% rise.
This upward trend can be partially explained by the growth in the market value of major cryptocurrencies like Bitcoin and Ethereum, as well as a steadily increasing number of investors.
The recent surge in Total Value Locked (TVL) has also been influenced by improvements and updates in certain DeFi protocols.
In 2023, there was a significant growth in the niche of Real World Assets (RWA) within DeFi, particularly in MakerDAO, which invested around $2.5 billion in RWA collateral to support its stablecoin Dai. This move aimed to reduce dependence on centralized stablecoins like USDC. Alongside the increase in annual revenue, the total value locked in MakerDAO rose above $8 billion.
The notable popularity of liquid staking protocols, such as Lido Finance, should not go unnoticed. Lido Finance allows users to earn rewards without locking their Ether with validators. Lido remains the largest DeFi protocol by TVL, with deposits exceeding $21 billion.
Additionally, in mid-2023, Uniswap launched Protocol v3, offering increased capital efficiency for network traders.
