The total value locked (TVL) in decentralized finance applications has surpassed $1 billion, prompting celebrations from the Ethereum community. Not everyone has been swift to toast the milestone, however, with suggestions that the true value locked into defi protocols is materially lower. Meanwhile, creeping competition from centralized lenders shows that defi will have to innovate if it is to retain its value proposition.
A Big Day for Defi
The moment decentralized finance advocates had been awaiting for weeks arrived on February 6, when the TVL of all assets in defi protocols exceeded $1 billion. At press time, that figure has receded slightly and is sitting at $997M. Defipulse.com, which tracks ecosystem growth, records Maker’s dominance to be 60%. The crypto collateralized stablecoin network is to defi what bitcoin is to the crypto market, its shadow looming large over proceedings.
Many of the decentralized lending, derivatives, and trading protocols draw their liquidity from Maker’s sai and dai stablecoins, which in turn draw theirs from ethereum. In a short blog post toasting the achievement, Defi Pulse proclaimed “$1 billion marks an important milestone for Defi to be celebrated. It illustrates the progress we’ve made towards our community’s vision of decentralized finance and the future of the world at large.” One year ago, the defi market was valued at less than $280M. Today, lending alone accounts for $766.5M.