Aave

Token

DeFi

Decentralized finance (DeFi) may be experiencing a revival, with key metrics such as active loans and total value locked (TVL) on the rise since their more recent lows in 2023.&nbsp;
Crypto market analytics platform Token Terminal proclaimed that “DeFi is waking up again” in a July 31 post on X. 
It <a href="https://tokenterminal.com/terminal/metrics/active-loans?v=OTA1NWVl" target="_blank" rel="noopener nofollow">backed</a> up this claim with charts and statistics, one of which was for active loans, which have returned to levels not seen since early 2022, at around $13.3 billion.
DeFi lending allows investors to lend out their crypto holdings to borrowers while earning interest on the loans. Lending and borrowing activity is a key metric for gauging DeFi participation and overall market health. 
<a href="https://cointelegraph.com/news/decentralized-finance-growing-up-de-fi-becoming-new-fi">DeFi</a> active loans hit a peak during the crypto bull run of 2021 at $22.2 billion when Bitcoin (<a href="https://cointelegraph.com/bitcoin-price">BTC</a>) and Ether (<a href="https://cointelegraph.com/ethereum-price">ETH</a>) were pushing $69,000 and $4,800, respectively. It fell soon after, hitting around $10 billion in March 2022 before plummeting down to $3.1 billion in January 2023.
However, since last year’s low, there has been a significant recovery in DeFi lending, <a href="https://x.com/tokenterminal/status/1818635120695226806" target="_blank" rel="noopener nofollow">according</a> to Token Terminal. The company added that active loans could mean leverage is increasing, which is a “leading indicator of a bull market.”
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 <img src="https://s3.cointelegraph.com/uploads/2024-08/9d7367bd-de3f-4ef9-b306-1116f77f7bba.jpg" alt="DeFi is ‘waking up again’ — Active loans return to 2022 levels" title="">
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 DeFi active loans. Source: <a href="https://x.com/tokenterminal/status/1818635120695226806" target="_blank" rel="noopener nofollow">Token Terminal</a>
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</figure>
<a href="https://cointelegraph.com/explained/bonding-curves-in-defi-explained">DeFi</a> total value locked also took a massive hit in 2023, with TVL falling 80% from its November 2021 peak of $180 billion to around $37 billion by October 2023.
However, since then, the sector has recovered roughly 160%, with TVL now standing at around $96.5 billion, <a href="https://defillama.com/" target="_blank" rel="noopener nofollow">according</a> to DefiLlama.
Additionally, DeFi TVL doubled in the first half of 2024 from around $54 billion to peak at $109 billion in June.
In a July 30 X post, Humble Farmer Academy founder Taiki Maeda <a href="https://twitter.com/TaikiMaeda2/status/1818011789092864132" target="_blank" rel="noopener nofollow">commented</a> that the sector is approaching a period of “DeFi renaissance” after more than four years of extreme underperformance.
He was referring specifically to DeFi lending platform <a href="https://cointelegraph.com/news/aave-founder-stani-kulechov-hospital-warning-crypto-founders">Aave</a>, which he said was “poised to outperform” due to the <a href="https://cointelegraph.com/news/aave-protocol-launch-stablecoin-gho-ethereum-mainnet">supply of its native stablecoin GHO surging</a> and the Aave DAO taking “great steps to lower costs and introduce new revenue drivers.”
Related: <a href="https://cointelegraph.com/news/liquid-restaking-tokens-ether-staking-defi">How liquid restaking tokens are revolutionizing DeFi</a>
However, <a href="https://www.coingecko.com/en/categories/decentralized-finance-defi" target="_blank" rel="noopener nofollow">according</a> to CoinGecko, the majority of DeFi-related <a href="https://cointelegraph.com/explained/exchange-coins-utility-explained">tokens</a> are still in the depths of bear market lows. This category of crypto assets has a market capitalization share of just 3.4%. 
Native tokens for some former darlings of DeFi, such as Aave (<a href="https://cointelegraph.com/aave-price-index">AAVE</a>), Curve DAO (<a href="https://cointelegraph.com/curve-dao-token-price-index">CRV</a>) and Uniswap (<a href="https://cointelegraph.com/uniswap-price-index">UNI</a>), remain more than 80% down from their all-time highs despite the border crypto market being down just 22% from its 2021 peak. 
Magazine: <a href="https://cointelegraph.com/magazine/tradfi-followers-ignored-lyn-aldens-btc-tip-7-figures-hall-of-flame/">TradFi fans ignored Lyn Alden’s BTC tip — Now she says it’ll hit 7 figures: X Hall of Flame</a>.

DeFi is ‘waking up again’ — Active loans return to 2022 levels

Cointelegraph

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