DeFi Has Grown 993% YTD, But it is a Modest Beginning for What’s to Come – Trillions!


Decentralized Finance (DeFi) is growing like crazy — the total value locked in the sector has reached a record of $7.38 billion, and the market cap of the top 100 DeFi projects has climbed to almost $15 billion.

The project dominance in the space is also changing as new projects gain traction. For a long time, Maker (MKR) was ruling the market, but in the past few months, the likes of Compound (COMP), Curve Finance, Yearn Finance, and Synthetix have been rapidly approaching the top.

For now, Aave (LEND), which is seeing institutional interest picking up as large transaction volume hit an ATH of $148 million, is leading with 20.50% dominance.

However, this could be just a humble beginning, as per Techemy Capital, a boutique investment management company who foresees a road to $5 trillion locked in DeFi.

According to them, putting the data on a log scale overlaying it with major protocol developments provides a “clear S-curve.”

Techemy TVL in Defi

Source: Techemy

A part of the crypto world since 2012, Techemy Capital has been building and investing in DeFi since 2017. In its initial thesis in 2016, it talked about the first wave of capital inflow with ERC20 standard and that “We’re at the cusp of a multi-decade wave of ‘digitising value.’”

Last year, their updated thesis saw actual utility evident in DeFi to break the classic bitcoin four-year cycles with a projection of $5 billion TVL by the end of 2020, which has already been achieved a couple of weeks back.

As it turns out, their original DeFi thesis wasn’t bullish enough given the exponential growth the sector is seeing as DeFi’s usefulness breaks out.

According to their latest thesis, it is the “infrastructure” that grows DeFi, and its usefulness has emerged in the order of stablecoins, DEXs, lending, automated money markets (AMM), derivatives, and Layer2 scaling. The last two have been maturing now. It says,

“As new infrastructure & DeFi protocols take hold, they replicate segments of traditional finance, and the value locked in DeFi grows.”

The global derivatives are valued at $1 quadrillion in notional value; they can crossover from traditional markets along with tokenized real-world assets.

But there are tech contractions in the path and “nature doesn’t tolerate bottlenecks,” so, layer2 and scalability solutions are just a matter of time, for which pressure and incentives both are too high.

“DeFi is on a path to consume all assets, financial or otherwise, both inside and outside of crypt.”

And this sector will grow to trillions because “it is acting like a vortex, sucking in anything that enters its gravitational field.”

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