This year Decentralized Finance (DeFi) market set off to a solid start. The recent crypto market bullish outburst helped DeFi to regain its total value locked (TVL). For the first time after the FTX collapse, the DeFi TVL reached a $50 billion market cap in the second week of February.
During November 2022, the DeFi TVL fell nearly $50 billion, as per data. At press time DeFi TVL recorded an all-time high for the past few months. The DeFi market regained its TVL due to a price rally by Bitcoin and other altcoins. On Thursday, TVL earned nearly $51.1 billion, $8.78 billion held by Lido. The largest Defi market, Lido, recorded its TVL reaching $8.8 billion.
On Feb 16, Ethereum rose by 6.5%, BNB increased by 4.2%, Cardano rose by 2.4%, and Polygon increased by 8.3%, as per DefiLlama data. And another top DeFi performer was Solana, with a 3.9% increase. The total volume in DeFi is $5.51 billion, 12.87% of the total crypto market, and the volume of all stablecoins is $38.01 billion, according to CoinMarketCap.
Recently ViktorDeFi, a researcher, tweeted, “DeFi prediction markets are arguably the most underrated crypto theses for 2023.” Ethereum blockchain, with a $42.36 billion amount of TVL, showed an increase of 25% from Dec 2022.
Is SEC crypto staking will impact DeFi
On Feb 9, the US regulator Securities and Exchange Commission (SEC), charged Kraken with breaching the nation’s security laws. In response, the crypto exchange agreed to shut off its staking service and to pay $30 million in penalties to settle the case, the agency reported on Thursday.
According to Lido, DAO business development head, the sudden crackdown on crypto staking by the US securities regulator might have unintended consequences for DeFi. On Feb 13, Jacob Blish said in a Bloomberg report, “The biggest risk I personally see as a US-based person is if they come down and say you can no longer interact with these types of protocols.”
Last week the Financial Stability Board (FSB) released a report on the financial stability risks on DeFi platforms. As per the report, DeFi is quite similar to traditional finance in terms of its functions or the risks it is exposed to. The FSB said DeFi’s unique characteristics might be triggered by these flaws like “Operational fragilities, liquidity and maturity mismatches, leverage and interconnectedness.
