After a summer eruption, curiosity in DeFi Total Value has cooled down. However, an uptick in capital poured into DeFi ventures occurred over the past week. According to DeFi Pulse, only in the last week an extra $1.32 billion was locked into smart contracts for DeFi ventures.
DeFi seems to recover as $1.32 billion dollars have been pumped in DeFi projects in just one week, raising the TVL to $12.48 billion dollars. pic.twitter.com/BMYKFvLU3f
— Mayor Capital (@mayor_capital) November 8, 2020
DeFi Total Value Locked Bounces Back
Decentralized finance (DeFi) could rebound after users contributed over $1 billion in only a single week to DeFi smart contracts. The overall valuation in the DeFi universe has risen since Saturday from $11.1 billion to $12.4 billion, according to data from DeFi Pulse metrics platform.
Ethereum is the platform on which virtually all DeFi ventures are focused. About half of the $12.48 billion in DeFi total value locked are in three Ethereum ventures – Uniwap, Wrapped Bitcoin, and Maker.
While not as large as the summer DeFi craze, curiosity into the space still remains and it looks like DeFi is here to stay.
What is Decentralized Finance?
Decentralized finance (commonly referred to as DeFi) is an experimental type of finance that utilizes blockchains, most commonly the Ethereum blockchain, instead of depending on financial intermediaries such as brokerages, exchanges or banks.
DeFi platforms enable individuals to lend or borrow funds from others, bet on market fluctuations of a range of assets using derivatives, trade crypto funds.
DeFi centers around software known as dapps (or decentralized applications) that execute financial functions on public ledgers called blockchains, a technology that was developed with Bitcoin but has then caught on more broadly.
Transfers are directly between users, media transactions instead of transactions with and through a centralized broker such as a cryptocurrency exchange. Others may borrow from this fund, usually more than the value of the loan, by contributing additional collateral.
The procedure changes interest rates dynamically depending on the asset’s moment-to-moment demand.
The absence of a central market applies to “decentralization.” A group of developers and programmers are operating smart contract projects for the DeFi protocols themselves utilizing open-source software.
As of August 2020, $3.7 billion of crypto-assets were invested in this way; as of September 2020, the amount was $7.8 billion. DeFi has drawn major blockchain investment capitalists such as Andreessen Horowitz, Bain Capital Ventures and Michigan Ventures.
Uniswap, a decentralized exchange or dex that operates on the Ethereum blockchain and allows for the exchanging of hundreds of various digital tokens that have already been distributed on the Ethereum blockchain, is an example of a DeFi protocol.
Uniswap’s algorithm allows users to form liquidity pools for the tokens, rather than depending on centralized market makers to fill orders.
#DeFi just crossed the $12B TVL again and is going for its previous ATH. This really is a separate market inside the overall altcoin market. There's no reason to think that it won't outperform them. #degen pic.twitter.com/ywtcZD2ZmA
— Cᚱypto Ξlfo⚔️🍻💰🎲 (@CryptoElfo) November 8, 2020