- DeFi is the financial technology that is revolutionizing the finance industry.
- The downfall of DeFi TVL was experienced by the industry.
- Despite the TVL down, liquidity staking and Tron-based projects trended.
Decentralized finance is a financial technology based on distributed ledgers that is evolving day by day in the finance industry. The DeFi projects experienced a downfall and their unique and old users were left in the millions.
What is DeFi?
DeFi (Decentralized Finance) is a financial technology used by cryptocurrencies and based on distributed ledgers. It empowers P2P (peer-to-peer) digital transactions and also eliminates the unnecessary fees that are charged by financial companies and banks for using their services. Secure digital wallets are available where individuals can hold money and transfer funds.
Applications of DeFi are dApps that are to run the blockchain and handle transactions. P2P can meet the needs of an individual’s loan. The growth of the DeFi industry and decentralization are key trends that help to achieve success with projects like Stylized Notes and Fraction. DeFi will see increased adoption with the value of Ethereum in 2023 and the user base will also grow, creating new opportunities for protocols and users.
The advantages of DeFi include transparency, reduced costs, better access to financial services, and potentially higher returns. The disadvantages are regulatory risks, complexity, market volatility, liquidity risks, technical risks, counterparty risks, and operational risks.
No Effects Of DeFi TVL Down On Liquid Staking And Tron Projects
Liquid staking projects have emerged as beacons of resilience in the ever-evolving landscape of the DeFi sector. It contrasts with the broader decline in DeFi categories. These projects have thrived despite the prevailing bearish sentiments. TVL now stands at $17.67 Billion, according to the latest figure and the liquid staking projects return almost 300% from their 2022 low. Lido is considered the dominant player within this niche and the major contenders include Coinbase, Binance, Kraken, etc.
In the DeFi projects, the Tron network also witnessed a significant amount of growth. Their contribution to the TVL hit was also an all-time high of 18.23%. The project came under scrutiny due to transparency and governance, as reported by CryptoSlate. Ethereum is always the primary platform for DeFi projects and applications and controls more than 50% of the market.
Many other projects host other networks, such as Polygon, Binance Smart Chain and Arbitrum. During the TVL down, DeFi projects lost 2.5 million monthly users, as reported by Altindex. The decline experienced in May has maintained the downward trend. But by the time of October, the DeFi sector boasted the largest number of users.
Conclusion
According to some reports, DeFi projects experienced a decline in the number of old and unique users monthly. They have dropped by 66% from the all-time high recorded in November 2021. The downfall did not affect the liquidity-staking projects or Tron-based projects. The Ethereum network is used as the base for these DeFi projects. However, most other projects are hosted by other networks, including Polygon, Binance Smart Chain, etc.
