The total value of decentralized funding, a metric that measures the amount of assets tied up for the DeFi ecosystem, has risen to $ 18 billion, according to DeFi Pulse.
While the graph suggests that DeFi is gaining acceptance, it does require some interpretation to be properly understood. Often times, the total blocked value is an incomplete metric in these scenarios. Differences in counting, protocols taking action to artificially increase, or just increasing the price of underlying assets can create the appearance of growth where there might not be.
DappRadar’s adjusted TVL metric, which calculates the total value established by fixing asset prices at the beginning of the study period, can provide an indication of what is happening.
The adjusted metric suggests that DeFi has actually seen very little growth since October 2020. Measured at constant prices, the total locked value for the entire bull markets Bitcoin (BTC) and Ether (ETH) remained at around $ 9 billion. This means that there was no net inflow of new assets. Instead, the existing supply of assets has increased dramatically in value.
Even so, there is a sizable TVL jump between Jan 4th and 5th, largely due to SushiSwap. The decentralized exchange continues to attract astounding amounts of liquidity through its continuous SUSHI rewards. The recently launched onsen menu is designed to incentivize a rotating series of liquidity pools, mostly containing smaller tokens. The exchange attracted around 2,000 BTC ($ 62 million), 40 million Dai, and 60,000 ETH ($ 60 million) in one day.
Another major win at TVL is Synthetix Network Token (SNX). However, the increase is largely due to a 30% increase in SNX price. The token is used to secure synthetic assets minted on the platform, so that price increases continue to have a direct impact on the acceptance of the platform.
Although inflows into DeFi have stagnated recently, the space is still showing healthy volume and acceptance. High Ethereum fees are likely to stifle further growth, but rollup-based scaling technologies could soon wear off.