According to data from DefiLlama, the total value of assets locked in decentralized finance (DeFi) protocols has surged to a three-month high of $42 billion. This remarkable recovery comes just two weeks after hitting its lowest point since February 2021.
The resurgence of the DeFi market can be attributed to two primary factors: the increase in asset prices and fresh capital inflows from participants seeking to generate yields through staking and lending.
Over the past fortnight, Ether (ETH), the foundational asset for the majority of DeFi activities, has seen a price rally from $1,590 to $1,810. Additionally, tokens like lido (LDO) and Aave (AAVE) have registered impressive gains of 25% and 34% respectively.
In tandem with the rise in asset prices, transactional volume across DeFi protocols has reached its highest level since March, with a record $4.4 billion recorded on October 24, as per DefiLlama.
Solana’s leading lending protocol, Marinade, saw a substantial 120% increase in total value locked (TVL) this month. This growth followed the launch of its native staking product, offering an 8.15% annual percentage yield (APY) to complement its 7.7% rate on liquid staking. Marinade’s competitor, Jito, also experienced significant growth, with a 190% increase in TVL to $168 million in the same period.
On the Ethereum network, platforms like Enzyme Finance, Spark, and Stader have seen their capital increase by 37% to 55%, outpacing the rise in asset prices, indicating fresh capital inflows.
Additionally, recently introduced layer one blockchains, Sui and Aptos, have seen positive growth this month. Sui’s TVL has surged from $34 million to $75 million, while Aptos has benefited from increased activity on the lending platform Thala, pushing its overall TVL to $75 million this month.
Despite the positive developments in the DeFi sector, risks persist. Even a slight decline in the price of ETH could trigger significant on-chain liquidations. Currently, there is a $76.2 million position on Aave that would be liquidated if ETH drops below $1,777, and over $100 million at risk of liquidation if the price falls by 20%.