Ever since DeFi Pulse launched its website in February 2019, the world of decentralized finance (DeFi) has completely changed.
Now DeFi Pulse, which measures the total dollar value of assets that have been committed to DeFi applications on the Ethereum blockchain, has just crossed the $100B mark. The site has been teasing the threshold since early September, when it hit $98B on Sep. 6, only to plunge down to $83B by Sep. 10.
DeFi Pulse first logged $1B in assets locked in early July 2020, meaning it took around 15 months for it to 100X the size of the market.
This milestone means there is now more than $100B worth of crypto assets sitting inside applications and earning yield and waiting for someone to make use of them. This idea of taking advantage of the open nature of Ethereum to create a metric based on these deposits’ dollar-value originated with DeFi Pulse. It’s known as “total value locked” and it has become the default indicator for a market’s health.
“Ethereum at this point has cemented itself as the capital city of DeFi. It’s not affordable, and congestion is sometimes crazy, but there is no more vibrant and creative place to be for DeFi than on Ethereum,” Haseeb Qureshi, of Dragonfly Capital, told The Defiant.
But a part of what’s changed about DeFi, though, is that it has expanded well beyond Ethereum. Today, DeFiLlama, which estimates the scale of Defi across all blockchains, puts the multichain TVL at a whopping $227B. That includes other chains such as Binance Smart Chain and Solana. Other sites that have followed DeFi Pulse’s lead also include DeBank and Defistation, among others.
In fact, no doubt part of the reason it’s taken so long to break $100B has been because so many other chains, such as Avalanche and Fantom, have launched attractive liquidity mining programs in recent weeks, luring value away from Ethereum. Still, Ethereum remains the clear market leader, with far more value locked than any other network. The other chains remain followers.
Much of the recent gains in cumulative TVL is likely due simply to appreciating value for underlying assets. ETH, the coin of the realm for DeFi Pulse, is up $1000, or roughly a third, since the end of September.
DeFi’s denizens were jovial if unsurprised about the number making this mark, as it has felt inevitable for some time. Many of the leading voices in the DeFi community noted the historic importance of the moment.
“One of the best things about hitting milestones like this is the validation that helps attract even more developers and entrepreneurs,” said CEO Tyler Spalding, of the crypto payments startup Flexa. “What may have started as farming food tokens has evolved into a full spectrum of financial products and NFT mania in less than 12 months.”
Some believe the DeFi is still in its first act. “It’s impressive and inspiring how much DeFi has grown in the past year, which underscores how much potential there is,” said Sam Bankman-Fried, the CEO of crypto derivatives trading giant FTX and ”That being said, the space still needs to make significant progress in order to deliver great products.”
DeFi Pulse exceeding $100B augurs even more growth to come, noted Matt Aaron, the co-founder of Uniwhales, a startup that uses public data to get investors actionable intelligence on crypto assets making moves. “I see DeFi TVL as a lagging indicator of a rising DeFi dominance,” he wrote over Telegram.
Josh Fraser, a cofounder of Origin, a protocol for marketplaces, used the occasion to note how applications have grown rapidly ever since the teams behind applications such as Synthetix and Compound proved the power of liquidity mining, that is, distributing governance tokens to users.
“We continue to see the power of incentives to drive outcomes. Aave rocketed to first place on the leaderboard after turning on rewards for their users,” Fraser said. “The protocols that will be most successful are the ones that are the most generous to their users. Since the rewards tokens these protocols are giving away represent governance votes, the protocols that will be the most successful will also end up being the most decentralized.”
Noting DeFi’s expansion beyond Ethereum, Ashley Tyson, general partner at Hypersphere Ventures, formerly of the Web3 Foundation, looked forward to a future with widespread blockchain interoperability. “We haven’t even scratched the surface. Ethereum has catapulted our industry into mainstream consciousness,” Tyson wrote. “Things are going to get even more interesting when we start bridging cross chain.”
Aave, Maker and Curve Finance are the three largest protocols listed on DeFi Pulse, with individual TVL’s ranging from $17B to $14B. All of the top 5 apps have over $10B in TVL.
To Tyson’s point, however, many of these blue chip DeFi applications have been copying their applications over to other layer-1 blockchains, a sign that a multichain future is virtually a fait accompli.