(REjected) Investments Locked Up in DeFi Skyrocket by More Than 2000%
The decentralized finance (DeFi) sector has crafted a name for itself in the blockchain/crypto space based on the boom it is experiencing. New data by DeFi Pulse and CryptoRank Platform reveals that since the beginning of 2020, the decentralized finance sector has been on a rollercoaster ride because it has surged by more than 2000%.
Monumental growth
The year 2020 has triggered a tremendous growth in the DeFi sector because, by 1st January, the total value locked up stood at $0.67 billion, but this figure had skyrocketed to $14.74 billion by 1st December. Crypto Rank Platform stated:
“Total value locked across the spectrum of smart contracts, protocols and DApps built on Ethereum increased by 32% in November: $11.16B —> 14.74B. Since the beginning of 2020, TVL in DeFi has surged by over 2000%.”
Therefore, DeFi’s total value falls shy of $15 billion, but this figure might soon be surpassed given that the much-anticipated Ethereum(ETH) 2.0, also known as the Beacon Chain, went live on Dec 1. It seeks to introduce a new consensus mechanism called proof of stake, which chooses the next block’s validator based on the amount staked or held.
As a result, the rewards reaped by validating blocks will be determined by how much ETH is staked in the network. If you have staked more Ether into the network, this will also increase your chances of being chosen to stake blocks.
Bridging the traditional finance gap
DeFi is seen as the bridge between the traditional centralized currency and the more unconventional and decentralized cryptocurrencies like Bitcoin. Therefore, developers build the same conventional financial apps, using a decentralized network and blockchain technology, simply on a small scale at a time.
There have been all indicators that DeFi has made a notable run in 2020. For instance, despite Yearn.finance, a decentralized yield optimization protocol, launching in July 2020, its token YFI one time hit $38,000 in late August, and this run beat Bitcoin’s record price rally in 2017. Later on, in early September, it smashed this record by rising to $39,600. It has also been making significant partnerships with other leading protocols like Cream and Pickle Finance.
Furthermore, a recent study by data acquisition and analytics company DappRadar noted that the top 10 decentralized applications (dapps) on the Ethereum Network surpassed 1 million daily users, with the bulk of them falling under the DeFi and exchange dapps category. The future looks bright for the DeFi sector as it seeks to go to the moon.