Total value locked in DeFi dropped by 66%, but multiple metrics reflect steady growth
The aggregate total value locked (TVL) in the crypto market measures the amount of funds deposited in smart contracts and this figure declined from $160 billion in mid-April to the current $70 billion, which is the lowest level since March 2021. While this 66% contraction is worrying, a great deal of data suggests that the decentralized finance (DeFi) sector is resilient.
The issue with using TVL as a broad metric is the lack of detail that is not shown. For example, the number of DeFi transactions, growth of layer-2 scaling solutions and venture capital inflows in the ecosystem are not reflected in the metric.
In DappRadar's July 29 Crypto adoption report, data shows that the DeFi 2Q transaction count closed down by 15% versus the previous quarter. This figure is far less concerning than the devastating TVL decline and is corroborated by a 12% drop in the number of unique active wallets in the same period.
Iakov Levin, CEO and founder of Midas Investments told Cointelegraph that:
Optimism is an Ethereum scalability solution using layer-2 to bundle transaction verifications off-chain, reducing the processing and transaction cost for decentralized applications on the network.
Venture capital inflows further support the resilience of DeFi thesis. On July 12, the crypto-centric Multicoin Capital launched a $430 million fund. The investment managing firm was founded in 2017 and aims to focus on developing Web3 infrastructure, DeFi applications and autonomous business models.
On July 28, Variant announced a successful $450 million capital increase to fund, among others, "financial empowerment through DeFi." The strategy includes the financialization and productivity of NFTs, stablecoins, lending optimizers, DEX aggregators and
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