DeFi TVL and variety of protocols at scale grew this yr, signaling the ecosystem’s elevated maturity.
As we glance again throughout 2023, we see a DeFi panorama that has undergone a change, shaking off a tough prior yr and a lingering bear market.
This retrospective delves into key facets of the house, encapsulating the developments, challenges, and triumphs that formed a yr marked by important milestones and intriguing developments.
2023 DeFi TVL
Complete DeFi TVL grew 110%, with Mainnet TVL reaching $46.768 billion. TVL for the primary Layer-2 chains (Optimism, Arbitrum, Base) was $3.30 billion. (Information supply: Defi Llama)
In 2023, the Complete Worth Locked (TVL) in DeFi skilled important development, significantly on Ethereum, which stays DeFi’s major blockchain. This surge in TVL might be attributed to the continued adoption of DeFi protocols and the growth of the ecosystem.
The surge in TVL for Layer-2 options continued by the yr, aided by the arrival of Base in August. These Layer-2 options contribute to assuaging congestion on Ethereum, by processing transactions off-chain and settling them on the Ethereum mainnet. They provide sooner and cheaper transactions, additional enhancing DeFi’s total scalability.
2023 DeFi Lending Markets
The three lending market giants (Aave, Maker, Compound) continued to carry out properly. Aave strengthened its place as customers migrated from v2 to v3. New entrant Spark loved a momentous first few months. (Information supply: Defi Llama)
In 2023, the DeFi lending market witnessed some notable developments amongst main gamers and the emergence of latest protocols. The panorama demonstrated ongoing innovation, regulatory concerns, and elevated adoption. The migration to Layer-2 options and the introduction of latest lending protocols added additional variety to the market.
Maker stays a pressure in DeFi lending with a TVL of $8.387 billion. It additionally launched the Spark Protocol in Could, a fork of Aave v3, and positioned as a possible rival to Aave. Spark’s TVL rocketed by the yr to a considerable $1.491 billion.
Regardless of challenges, Aave maintained a robust place in 2023, experiencing a resilient development trajectory. Aave’s TVL of $6.183 billion was pushed partly by customers migrating from Aave v2 to v3.
2023 Bulls vs Bears
For Summer season.fi, August was essentially the most bearish month. This was proceeded by essentially the most bullish a part of the yr, peaking in December. (Supply: Summer season.fi inhouse information.)
At Summer season.fi, we noticed the bulls successful out towards the bears in all however two months (Could and August). Bullish exercise is denoted by will increase to lengthy positions and bearish exercise by decreases to lengthy positions.
It’s a winter bull season at Summer season.fi, with the bears being left behind in August, essentially the most bearish month of the yr. December has confirmed essentially the most bullish, with 65% of actions represented by will increase to lengthy positions, towards 35% decreases.
2023 DeFi Bluechips
This yr noticed large rise in many of the bluechip DeFi tokens, because the crypto market as an entire went up. Ethereum has seen a yr to this point improve of 93%, AAVE of 81%, MKR 139.4%, COMP 57.3%, and UNI of 16.3% in greenback phrases.
The whole crypto market cap rose from $840B to $1700B, based on Coingecko. So from that perspective, simply MKR beat the market.
For 2024, DeFi is the place to be. What is best to maintain your eyes on? In accordance with Tastycrypto, the biggest DeFi segments are DEXs with 31% of the TVL and lending protocols with 17%.
- Some examples of DeFi tokens:
DEX cash: Uniswap (UNI), Curve (CRV), PancakeSwap (CAKE), Balancer (BAL) - Staking cash: Lido (Lido) & Rocket Pool (RPL)
- Lending/borrowing Cash: Aave (AAVE), Compound (COMP), Simply (JST)
- By-product Cash: GMX (GMX) & dYdX (DYDX)
2023 DeFi Protocols
Constructing within the bear market: we finish the yr with 4 additional DeFi protocols at scale.
Defi protocols with over $250m TVL:
- Maker
- Aave
- Compound
- Uniswap
- Convex Finance
- Curve Finance
- Spark (new 2023)
- Frax finance
- Liquity
- Balancer
- Morpho (new 2023)
- Synthetix (new)
- Prisma Finance (new 2023)
- dYdX
- Lybra Finance (new 2023)
- Sushi
- Yearn
- Aura
- EigenLayer (new 2023)
In 2023, the DeFi panorama witnessed notable development. Together with TVL growth, the yr additionally noticed a rise within the variety of protocols at scale. In the beginning of the yr, there have been 15 protocols thought of important (with a TVL of $250 million or extra, excluding liquid staking). By the top of the yr, this quantity had expanded to 19 protocols.
The rise in protocols signifies a fast growth within the DeFi ecosystem. Their addition suggests a diversification of choices throughout the house, as totally different protocols usually cater to particular functionalities or monetary providers. Buyers, builders, and customers seem like more and more assured within the capabilities and potential of decentralized monetary options.
Trying Forward
It’s clear that the DeFi sector has taken one other step in its growth throughout 2023 and, exiting the yr, the sector’s development seems to be set to proceed.
The yr was marked by exceptional TVL development, Ethereum’s sustained dominance, and the numerous position of Layer-2 options in addressing scalability issues. Regulatory concerns, innovation, and elevated adoption characterised a dynamic lending market, demonstrating a rising variety with new protocols and an growth of functionalities and choices.
Market sentiments depicted a transparent shift from bearish to bullish. The DeFi panorama expanded, ending the yr with 5 extra important protocols than in the beginning. As 2023 concludes, DeFi’s growing maturity has set the stage for a dynamic future, trying set to essentially problem conventional monetary providers.
This analysis report was contributed to The Defiant by Summer season.fi CEO Chris Bradbury.
