In the context of the 2024 bull market continuing to expand, the inflow of capital into the crypto sector is setting new records. ETH prices remain stable, while Bitcoin reaches historic highs, creating a strong spillover effect to DeFi protocols.

More value is being locked through Bitcoin and Ethereum, as their values rise sharply towards the end of the year. The bull market has driven a comprehensive recovery of DeFi over the past month, reflected in the strong capital inflows into Bitcoin staking protocols and Ethereum-based DeFi.

Notably, the capital flowing into liquidity restaking – a prominent segment throughout the year – is even larger. Additionally, Hyperliquid's rise has made this platform one of the largest centers for locked value, only surpassed by Bitcoin and Ethereum.

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Capital inflows into BTC, ETH, and Hyperliquid DEX | Source: Lookonchain

The increase in total value locked (TVL) indicates that Hyperliquid is accelerating the intake of capital flows. The TVL in Bitcoin and Ethereum continues to rise strongly thanks to price momentum, while also increasing the collateral value on these platforms.

Capital inflows into leading projects include user deposits into DeFi and investments through ETF funds. Although there are differences in capital flows between ecosystems, the general trend remains positive. Notably, TRON recorded the largest capital outflows, while L1 and L2 chains with developing DeFi and Web3 applications continue to attract new capital.

Bitcoin staking activity also saw a surge last week, especially after the Cap-3 event of Babylon Labs concluded on December 16. This event attracted an additional 59,983 BTC, equivalent to $5.38 billion, through non-custodial staking across 1,000 blocks. These new capital flows will continue to be reflected in the coming weeks, significantly expanding the TVL of the Bitcoin network. Currently, according to data from DefiLlama, Bitcoin's TVL stands at $6.93 billion with BTC valued over $104,000. The majority of the value is locked at Babylon Labs, which is managing $5.63 billion.

Hyperliquid increases TVL with new trading incentives

Hyperliquid is in the process of developing a decentralized futures trading platform. This DEX adds new trading options, starting with low leverage.

Hyperliquid is also continuously expanding open interest (OI)*, attracting stablecoin flows. The exchange does not deploy a spot market and only offers derivative pairs.

According to other metrics, Hyperliquid locks $3.19 billion with vertical growth since its launch in December. The growth of the HYPE token and high-speed trading potential is boosting Hyperliquid's position as one of the actively developing protocols.

Thanks to this growth, HYPE prices are on track to expand, trading at $26.96 with no significant drops since the token creation event. HYPE holders are also not selling, unlike the initial Magic Eden (ME) recipients.

HYPE price chart | Source: Bitcoin Magazine

Staking and restaking liquidity on Ethereum boosts DeFi

Another source of liquidity provision and locked ETH comes from DeFi applications with mandatory collateral. Liquidity staking currently brings in a total of $70.69 billion, generating $7.68 million in daily fees. LidoDAO remains the leader with over $39 billion in locked value.

Liquidity restaking protocols are also attracting significant inflows, creating another layer of liquidity. Throughout 2024, liquidity restaking increased by over 6,000%, with TVL rising above $17 billion.

EtherFi is the leader, holding over $9.37 billion, followed by KelpDAO. The sector started with just $284 million in January. Overall, DeFi now locks more than $140 billion, an unprecedented level since April 2022. The value of DeFi has sharply decreased since 2022, while protocols have to rebuild and liquidity flows into new applications.

One of the standout growth applications in 2022 is Aave (AAVE), which currently holds over $22 billion in various assets. Additionally, $196.8 billion in stablecoins created is also adding to the liquidity available for pools, staking, and lending.

*OI (open interest) is a measure of the total value of all outstanding futures contracts or “unsettled” contracts on exchanges, and at the same time is an indicator of market bullishness as well as trader sentiment around a specific asset.

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