Q1 2024 has marked a significant resurgence in the decentralized finance (DeFi) sector.
According to an article by Cointelegraph, citing data from DefiLlama, the TVL in DeFi platforms surged from a low of $36 billion in Q4 2023 to a peak of almost $97 billion in the first three months of 2024. This upward trend continued, reaching a two-year high of $98 billion last week, indicating an 81% increase since the start of the year.
A joint report (titled: “The OnChain Report: 2024 Q1″) by QuickNode, a blockchain infrastructure platform that makes it easy for developers and businesses to build and scale Web3 applications, and Artemis, a data analytics platform, noted that “staking, liquid staking, restaking, and liquid restaking have all been key drivers behind DeFi’s recent rapid expansion” before adding that “this is why staking now accounts for a significant share of DeFi’s total value locked (TVL).”
The Cointelegraph article went on to say that one of the standout protocols in this boom has been Lido, which dominates the liquid staking ecosystem with a 62% market share. Lido’s success helped to push the liquid staking TVL to an all-time high of $63 billion on March 13. It also mentioned that another notable performer, EigenLayer, saw its TVL skyrocket by 990% during the same period, ending the quarter with $12 billion. EigenLayer has introduced the capability for ETH to be staked multiple times for additional yields, adding a new layer of utility and incentive in the DeFi space.
According to the authors of the report, there has been a notable 42% quarter-over-quarter increase in stablecoin user activity. This surge is primarily driven by several key factors: the approval and listing of spot Bitcoin ETFs, the forthcoming Bitcoin halving in April, a significant migration away from hyperinflated fiat currencies, and a revival in the popularity of decentralized finance (DeFi) platforms.
The report highlights a new era for DeFi in the first quarter of 2024, marked by renewed optimism, heightened risk awareness, and refined innovation. A striking 291% increase in user activity from the previous quarter has sparked expectations of a second ‘DeFi Summer.’ This anticipated growth suggests a transformative shift in the sector, despite ongoing regulatory challenges from entities such as the SEC.
Web3 gaming emerged as a standout category, as noted in the report, with a significant 155% quarter-over-quarter increase in active addresses. This growth underscores Web3’s capacity to attract and maintain a growing player base, showcasing the sector’s potential for sustained engagement.
The authors also point to the rapid expansion of Layer 2 solutions as a critical development over the last six months. Notable platforms like Arbitrum and Base have seen substantial growth in total value locked (TVL), indicating a robust appetite for expanding on-chain liquidity, which is essential for the broader proliferation of Web3 technologies.
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