Coinspeaker Steno Research Predicts Surge in DeFi TVL Amid Interest Rate Shifts
The decentralized finance (DeFi) sector is expected to have a major resurgence, with experts predicting that total value locked (TVL) in the ecosystem could reach an all-time high as early as the first half of 2025. According to a recent report by Steno Research, the DeFi sector is already showing strong signs of recovery, with its TVL standing at $86.75 billion, a notable 60% increase since the beginning of 2024.
This optimistic outlook is underpinned by several key factors, with interest rates in the United States playing a particularly critical role. Mads Eberhardt, an analyst at Steno Research, emphasized that interest rates are a major determinant of DeFi’s appeal.
The DeFi summer of 2020, which followed the Federal Reserve’s interest-rate cuts in response to the COVID-19 pandemic, serves as a historical precedent.
As interest rates fell, the DeFi sector experienced a rapid expansion as investors looked for alternative, high-yield opportunities in decentralized markets. In late 2021, the DeFi sector recorded a massive TVL of $180 billion, according to the data by DeFiLlama.
A similar pattern may be emerging today as interest rates fluctuate, creating conditions favorable for DeFi’s growth.
Other Major Factors
The growth of stablecoin supply is another driving force behind DeFi’s resurgence. Stablecoins, often pegged to the U.S. dollar, are the backbone of DeFi protocols, facilitating transactions and providing liquidity. As interest rates decrease, the opportunity cost of holding stablecoins diminishes, making them more attractive and boosting the broader appeal of DeFi.
Notably, the stablecoin supply has expanded by around $40 billion since the beginning of 2024.
As Steno Research notes, the continued growth of real-world assets (RWAs) within DeFi is also a major contributor to the sector’s expansion. Tokenized stocks, bonds, and commodities have surged by 50% year-to-date, reflecting strong demand for on-chain financial products. These RWAs are bringing traditional financial assets into the decentralized space, further enhancing DeFi’s appeal to investors.
According to CoinMarketCap, the market cap of the DeFi crypto sector currently stands at $61.32 billion, reflecting a 3.13% decline in the last 24 hours. The top five DeFi tokens, Avalanche (AVAX), Chainlink (LINK), Dai (DAI), Uniswap (UNI), and Stacks (STX), have seen notable value increases recently. For instance, AVAX, now trading at around $26.1, has surged by about 30% in the past week.
Security Breaches in DeFi
Despite these positive developments, the DeFi sector is not without its challenges. Security breaches remain a significant concern, with an increasing number of attacks targeting DeFi protocols. In July alone, hackers launched a series of high-profile attacks on platforms like Dough Finance, LI.FI, and Rho Markets.
Additionally, a DNS hijacking incident last month compromised over 220 DeFi protocol interfaces, highlighting the ongoing risks associated with decentralized finance.
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Steno Research Predicts Surge in DeFi TVL Amid Interest Rate Shifts
