The crypto market is going through a turbulent time. Bitcoin has lost nearly 30% of its value from the beginning of this month. It is now trading well below $7,000. Ethereum is not doing very well either – ETH price has fallen nearly 11% in 24-hours and is trading at $135. XRP has plunged nearly 10%, and is now trading at $0.209. Other top cryptocurrencies are also in red. However, DeFi applications seem to be making the best out of the turmoil in the crypto market. The total value locked (TVL) in ETH in DeFi apps is at an all-time high.
TVL (ETH) in DeFi At An All-Time High
On 25th November, the total value locked (ETH) in DeFi applications hit 4.422 million, thereby establishing a new all-time high. This uptrend, which began in mid-2019, has been mostly steady with some minor kinks every now and then. This shows that that investment in DeFi is on the rise and it is not correlated to the rest of the crypto market which has seen significant ups and downs in the last six months.
Maker, Synthetix and Compound continue to be the top 3 DeFi apps. Maker and Compound are lending apps which enable users to borrow money by using ETH and other cryptocurrencies as collateral. Synthetix is a derivatives protocol that allows users to invest in real-world assets like commodities, fiat currencies and crypto assets. At press time, Maker’s TVL (ETH) is up 1.7%, Synthetix’s is up 15% and Compound’s is up 3.8%. The TVL (ETH) of all other DeFi apps, except for InstaDApp and Augur, is also in green. Maker’s dominance, however, has fallen below the 50% mark. Synthetix’s dominance has been increasing rapidly. From $491.788 K ETH on November 1, the TVL (ETH) locked in ETH now stands at over 1 MM.
TVL (USD), however, in DeFi apps is down from its all-time high. At press time, it is at $595 MM, down nearly 12% from its all-time high of $675 MM on November 21. The loss in TVL (USD) can be attributed to the loss in ETH value. Though the amount of ETH locked in DeFi has increased, the price of ETH has plunged severely over the last few days, which translates into a loss in TVL (USD).
Falling ETH Value the Reason Behind the Growth in TVL (ETH)?
The reason for the growth in TVL (ETH) could be attributed to the falling value of ETH. Investors, not wanting to sell ETH at depressed prices, are likely to be putting it to other uses, such as using it as collateral for availing a loan or using it to invest in relatively safe crypto derivative projects like Synthetix. Also, several lending protocols also enable users to lend their ETH and earn an interest on it. Thus, the growth of DeFi is owing to the crypto community gradually realising that DeFi apps are a viable use case of Ethereum.