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Reports suggest that the total value locked (TVL) in smart contracts across the crypto market experienced a significant decline. In April 2022, the TVL stood at 160 billion USD, since then a lot of changes took place. And now while at the time of writing, the TVL dropped to approx 70 billion USD. After the whooping 66% drop, the current value reached a level similar to March last year.
However, many believe that even such factors might not put decentralized finance (defi) space under any strain. This is due to the fact that despite TVL being a broad metric, it lacks several crucial details. The metric does not reflect anything related to defi transactions, layer-2 scaling solutions growth, and inflows of venture capital within the ecosystem.
Additionally, Dappradar published its Crypto adoption report on July 29th, 2022. As per the data, the number of transactions on decentralized finance platforms dropped down by 15% in comparison to the statistics during the last quarter. Additionally, the report also showcased the TVL decline and unique active wallets number dropping by 12% within a similar time frame.
Midas Investments founder and CEO, Iakov Levin, said he is sure the ongoing bear market would not be acting as an end to the defi industry. He explained that still there is increasing competition across different decentralized exchanges based on Ethereum’s layer-2 scaling solution platform named Optimism. The solution uses layer-2 for bundling up the verifications of transactions off-chain. This reduces the cost of processing and transaction for different decentralized applications across the network.
Further on the funding front, the defi sector sees significant inflows. On July 12th, 2022, Multicoin Capital, a crypto-centric venture capital firm launched a fund worth 430 USD million. Later on July 28th, 2022, Variant also successfully managed to raise funds worth 450 million USD in order to fund different defi-directed financial empowerment.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
