In this article we analyze the situation of the cryptocurrency market, in particular for the DeFi sector, whose TVL (Total Value Locked) has been declining for the last 6 months after a start to 2023 that had raised hopes of an upward recovery.
As of April 2023, TVL locked on the various decentralized protocols had reached the $53 billion mark, while it now shares a value of $38.2 billion for a reduction of approximately 28%.
Completely opposite trend, on the other hand, for Ethereum's layer 2 niche (rollup and ZK), whose TVL has doubled since the beginning of 2023 thanks mainly to the success recorded by Arbitrum, Optimism, Base and ZkSync Era.
Let's see all the details below.
Crypto DeFi: TVL hits 2023 lows after sharp drop in last 6 months
After a crunch beginning of 2023 for the crypto market with the DeFi sector recovering some of the TVL lost during the 2022 bear market, here comes pessimism again.
In the last 6 months, the total value locked within decentralized finance In fact, protocols have decreased by approximately 28%, from $53 billion in mid-April to the current $38.2 billion, one of the lowest figures of the entire current year.
If we calculate the trend annuallyTherefore, taking the data from October 2022 as a reference, we note that the decline reaches the 30% mark.
This is a real shame because from January 2023 to April the TVL of the DeFi market had added around $15 billion, raising hopes of a recovery after more than $126 billion was lost in 2022.
Instead, there are no dice: investors, especially institutional investors, seem hesitant to invest capital in a niche market like cryptocurrencies, where speculation reigns.
Rather, much of the capital that until recently characterized the burgeoning DeFi market has now been funneled into bonds and low risk financial productsdue in part to an increase in iinterest rates in the US. That has made these types of investments more attractive.
This trend is confirmed by the number of DeFi users, which from an all-time high of 7.51 million has plummeted 66% to 2.56 million.
Despite the sharp drop in 2022 and the last 6 months, Ethereum remains the most dominant blockchain, as well as smart contract platform in the crypto market, with a TVL locked within the various protocols orbiting within it of $20.6 billion for a market share greater than 54%.
However, even for the queen of the crypto market, we can observe a drop compared to April 2023, as at that time its ecosystem was worth 70% of the entire DeFi TVL.
On the other hand, a separate speech for tronthat in the same period strengthened its position from 6.5% to 17.9% market shareconfirming its position as the second most dominant blockchain data in this context.
Completing the podium is Binance Smart Chainwhich compared to its main competitors is the one that has lost the most in the last 6 months, seeing more than 40% of the capital located in it evaporates. To date, the cryptographic network in the hands of the binance Exchange has a market share of 7.3%.
Opposite trend for Ethereum layers 2 with Arbitrum, Optimism, Base and ZkSync gaining users and capital.
Within the DeFi landscape, there are a niche sector that stood out in 2023 for moving in the opposite direction to the rest of the crypto market, seeing its TVL double.
We are talking about Ethereum Layer 2specifically cryptographic networks use zero-knowledge computational proofs in Optimistic Rollup and Zk Rollup versions.
For these types of chains, since the beginning of the year we have seen an increase of $6.2 billion in cryptocurrencies orbiting within them.
Compared to October 2022, the growth was $5.55 billion.an astonishing figure if we take into account that it represents double the TVL stored by the well-known Binance Smart Chain.
The real boom of this sector occurred between January and April, a period in which Ethereum's layer 2 narrative went viral and gained fame among the crypto community.
From the April high until now there has been a slight drop of just over a billion dollars, but this could easily be recovered in the coming months with the development of successful protocols within Ethereum. rolls.
Among the main actors of this strong trend are DecisionOptimism, Base and ZkSync Era block chainswhich together comprise around 88.7% of the market share of the entire Ethereum layer 2 market.
Decision represents the spearhead of this niche sector and since January 2023 has seen its TVL more than double from $2.56 billion (bridge assets are also counted and not just those locked in protocols) to the current $5.84 billion.
For Optimism we can see the same results as the complementary Optimistic rollup, seeing its TVL increase from $1.14 billion to $2.71 billion.
About him Base On the front, layer 2 of the Coinbase crypto exchange, there have been Amazing growth in just two months since its inception.crossing the TVL threshold of $500 million in a very short time.
Finally, even for the fourth layer 2 of the ranking, as well as for the first zk-rollup in terms of fame and locked capital, i.e. It was ZkSyncWe can see Great progress since March 2023., the period related to the launch of the mainnet. To date, this network totals an internally locked funds equivalent of $435 million.
What most likely contributed to the growth of Ethereum layer 2 was the airdrop narrative that prompted many users to invest their capital within these cryptographic networks hoping to get gift tokens.
Arbitrum and Optimism have already made their airdrops to their communities in March 2023 and May 2022, respectively. Base and ZkSync have not yet released dates on the distribution of their native tokens, but major updates may be revealed soon.It is not certain that Base will launch its own crypto and that it will be distributed by airdrop, but rumors suggest that this scenario is feasible. For ZkSyncOn the other hand, more or less all airdrop hunters agree that Matter Laboratories It will give you great satisfaction.
