DeFi ‘Waking Up’ as Active Loans Surge to $13.3 Billion, Reaching Early 2022 Levels

cryptonews.com:

Decentralized finance (DeFi) appears to be experiencing a resurgence, as key indicators such as active loans and total value locked (TVL) show significant growth from their 2023 lows.

In a recent post on X, crypto market analytics platform Token Terminal noted that active loans have climbed to approximately $13.3 billion, levels not seen since early 2022.

DeFi lending, which allows investors to lend their crypto holdings to borrowers in exchange for interest, is a crucial metric for assessing DeFi participation and overall market health.

During the 2021 crypto bull run, DeFi active loans peaked at $22.2 billion, coinciding with Bitcoin and Ethereum nearing $69,000 and $4,800, respectively.

However, this figure plummeted to around $10 billion by March 2022 and further to $3.1 billion in January 2023.

The recent recovery in DeFi lending, as noted by Token Terminal, suggests a potential increase in leverage, which is often seen as a leading indicator of a bull market.

Since hitting its low last year, the sector has rebounded significantly, with active loans rising back to $13.3 billion.

Total value locked (TVL) in DeFi also suffered a dramatic decline last year, falling 80% from its November 2021 peak of $180 billion to approximately $37 billion by October 2023.

However, the sector has since seen a remarkable recovery of around 160%, with TVL now standing at roughly $96.5 billion, according to DefiLlama.

Furthermore, DeFi TVL doubled in the first half of 2024, peaking at $109 billion in June.

DeFi waking up again