DeFi Remains One of The Biggest Losers in H1

Godfrey Benjamin   Aug 15, 2022 03:40 2 Min Read

The crypto winter is almost wearing off based on several indices, and looking back to the outlook in the first half of the year. The Decentralized Finance (DeFi) ecosystem can be tagged as one industry's biggest losing sectors. 


The combined Total Value Locked (TVL) in the DeFi ecosystem opened the year at a value of $169.1 billion, but at the time of writing, this value has dropped to $67.66 billion. The onslaught experienced over the past few months was encompassing, with investors exhibiting caution concerning their locked funds.

Decentralized Finance offers quite a lot of opportunities that tend to rival what the traditional financial ecosystem presents. One of these is lending; an offshoot adapted to decentralized and centralized lending platforms. This was one of the weak links that generally impacted the broader digital currency ecosystem in the second quarter (Q2) with the most prominent lending platforms crumbling with the liquidity pressure that was ushered in.

Meeting customers' obligations became extremely difficult following the ripple effect of the Terra USD (UST) and LUNA token crash back in May. While the known decentralized lending platforms like Compound (COMP), JustLend (JST), and Venus (XVS) are still operating, the impact currently being felt is in the slump in their individual TVLs.

Compound, for instance, opened the year with a TVL of $8.92 billion, which is currently pegged at $3.08 billion. This plunge comes at more than a 150% slash and is representative of what most of the DeFi protocols faced in the first half of the year.

The outlook and projections for the rest of the second half of the year are bullish and are based in part on the forthcoming migration of Ethereum (ETH) from the Proof-of-Work (PoW) consensus model to the Proof-of-Stake (PoS) network. With this event, analysts are projecting that the positive upgrade for Ethereum can also serve as a good prop-up for other DeFi protocols.

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