- In Q1 2024, 76% of the decentralized finance yield market, totaling $43.8 billion, earned around 5% APY through low-risk contracts.
- Staking, notably on #Ethereum 's transition to Proof-of-Stake, drove this resurgence in decentralized finance.
- The bridging sector saw a 51% increase in Total Value Locked (TVL), rising from $94.8 million to $143.6 million.
Interest in low-risk activities such as #staking and secured lending is increasing, while sectors like insurance and derivatives are experiencing decreased interest. This shift emphasizes the difficulty of integrating certain financial activities into the decentralized finance framework due to information imbalances between liquidity providers and yield seekers.
The study reveals that staking, fueled by Ethereum's transition to Proof-of-Stake, now constitutes 80% of decentralized finance's total value locked (TVL)! Conversely, decentralized exchanges (DEXs) experienced modest growth, with concerns over impermanent loss and media narratives contributing to a decline in TVL compared to the previous year.
However, the bridging sector witnessed a notable 51% increase in TVL, reaching $143.6 million, largely attributed to the emergence of Layer 2 rollups. The breakdown of annual percentage yield (APY) by source indicates a decrease in rewards-based yields, signaling a maturing #DeFi market increasingly driven by actual on-chain activity.
Smart money getting smarter in other words!
