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Author: Flow, Swissborg Researcher; Translation: 0xjs@作 作 作 作 作 作
It is called “DEFI Summer” in the summer of 2020, which is an incredible period for the encryption industry.For the first time, DEFI is no longer just a theoretical concept, but an effective concept in practice.During this period, we witnessed the surge in the popularity of several Defi primitives -DEX (decentralized exchanges) Uniswap, lending agreement AAVE, algorithm stabilized coin Sky (former MakerDao), and more.
Subsequently, the total lock value (TVL) in the DEFI application increased significantly.From about $ 600 million in early 2020, to the end of the year, TVL rose to more than $ 16 billion, and reached its historical highest level in December 2021, exceeding $ 210 billion.This growth is also accompanied by a strong bull market in the DEFI field.
source:
We can say,There are two main catalysts behind “DEFI Summer”:
1) The DEFI protocol has made breakthrough progress, so that it has the ability to expand and provide clear use cases.
2) The Fed began a loose cycle, and during this period, interest rate cuts were greatly cut to stimulate the economy.This makes the fluidity in the system abundant and inspires people to seek more strange income opportunities, because the traditional risk -free interest rate is very low.This is the perfect condition of Defi’s booming.
Source: San Louis Fed Branch
However, as many new disruptive technologies, Defi adopts the common S -curved trail trail, which is usually called the Gartner speculation cycle.
From a macro perspective, the situation is: at the beginning of “DEFI Summer”, early buyers have a strong belief in the transformation of their investment technology.For DEFI, its idea is that it can fundamentally change the current financial system.However, as more and more people enter the market, the enthusiasm has reached its peak, and the purchase of more and more by the speculators is driven by the speculators. They are more interested in fast profit than their interest in the underlying technology.After this excitement, the price fell, the public’s interest in DEFI weakened, we faced a bear market, and then there was a long period of stagnation.
However, there are sufficient reasons to show that this boring stagnation stage is not the end of DEFI, but the beginning of the real journey adopted in large scale.During this period, developers continued to develop, and the number of firm believers was growing slowly.This lays a solid foundation for the next iteration of the Gartner hype cycle. The next round of iteration may bring more adopors, and the scale will be larger.
DEFI rejuvenation
As of writing this article, this situation seems to be expected to promote DEFI revival.Similar to the catalyst behind the last DEFI summer,We currently have: the new generation of more mature DEFI protocols; healthy and growing DEFI indicators; the arrival of institutional participants; and the loose cycle of the Federal Reserve is in progress.Third, this is the perfect environment of Defi’s booming.
In order to understand more clearly, let’s analyze these components:
Award DEFI 2.0
Over the years, the DEFI protocol and applications have grown from the first wave of hype in 2020.Many problems and restrictions faced by these protocols have been solved for the first iteration, which has formed a more mature ecosystem.This is the rise of the Defi 2.0 movement we are talking about now.
Some key improvements include:
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Better user experience
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Cross -chain interoperability
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Improve the financial structure
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Improve scalability
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Enhanced chain governance
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Improve security
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Appropriate risk management
In addition, we also saw some new cases.DEFI no longer involves only transactions and borrowing as early as early.New trends such as pledge, liquidity pledge, native income, new stablecoin solutions, and real -world assets (RWA) tokenization make the ecosystem more active.But what is even more exciting is that we also see that the new primitives are constantly constructing while we speak.The latest thing that attracted my attention was the chain of credit breach (CDS) and fixed interest rates/regular loans based on the existing borrowing infrastructure.
Healthy and growing DEFI indicators
Since the end of 2023, with the emergence of a new wave of DEFI protocols, we have witnessed the recovery of the Defi event.
First of all, from the perspective of the total locking value (TVL) in the encrypted ecosystem, we have observed that after a long period of stagnation, we have begun to recover.From $ 4.1 billion in October 2023, TVL has nearly doubled, reaching a local high point of $ 118 billion in June 2024, and then stabilizing to about $ 85 billion.Although this is still lower than the historical highest level (ATH), it is still a significant upward trend.There are sufficient reasons to show that this may be the first wave of TVL’s long -term upward trend.
Source: DEFI LLAMA
Another interesting indicator is the spot transaction volume of DEX to CEXIt measures the relative trading activities between the centralized exchange (CEX) and the decentralized exchange (DEX).We once again noticed a positive long -term trend, indicating that more and more transaction volume is being transferred to the chain.
Source: The Block
In the end, it is not the most unimportant point that in recent months, the market share of Defi has been increasing compared to a broader crypto ecosystem.In a market where everyone is competing for attention, DEFI began to cause a sensation again.
Kaitoai: DEFI continues to show up trends in the mental share.If Trump wins, it is difficult to see which industry will benefit more.
The arrival of institutional participants
Although the first batch of DEFI participants in “DEFI Summer” are mostly individuals who try to master this new technical force, the new wave of Defi protocol has begun to attract several large traditional financial participants into the DEFI field.
In March of this year, Bellaide, the world’s largest asset management company, launched its first token funds on the Ethereum blockchain—— Belle German US dollar digital liquidity fund (Buidl fund) allows investors to earn US Treasury bonds directly on the chain.Berlaide’s first Defi plan has achieved obvious success, and the fund has attracted more than $ 500 million in asset management scale.
Another increasingly interesting example worthy of noticeable institution isPayPal’s pyusd stable currencyThe currency recently reached an important milestone:Only one year after launch, the market value exceeded $ 1 billion.
These examples show that a wider range of financial industry finally began to acknowledge the value proposition of building financial systems in decentralized blockchain technology.Quoting PayPal’s chief technology officer: “If it can reduce my overall cost and bring me benefits at the same time, why not accept it?” As more and more institutional participants start trying this technology, we can sayThis should become a powerful catalyst in the field of DEFI.
The Federal Reserve’s loose cycle is in progress
In addition to the above points,The current trend of US monetary policy is also another potential catalyst of DefiEssenceIn fact, we just crossed a major inflection point of the economy.Since the Fed’s anti -inflation since the new crown epidemic, the Federal Reserve cuts 50 basis points at the FOMC conference for the first time. This is a strong signal that shows that a new round of loose cycle is ongoing.The expected trend of federal fund interest rates further proves this.
The new round of currency loose cycle began to support two key arguments of the Defi bull market:
1) This loose cycle will inevitably increase liquidity in the system.Liquidity is the key element of the financial market, and the surplus liquidity is beneficial, because it means that more funds can enter the market.DEFI and a wider encryption market will inevitably benefit from it.
2) The decline in federal interest rates will also mechanically increase the relatively attractiveness of DEFI yields.In short, investors will begin to seek other income opportunities with the decline in traditional risk -free interest rates.This may lead to the market turn to DEFI. DEFI provides extensive attractive rates of stable coins and other strange strategies -safer and reliable than a few years ago.
Will history be repeated?
All in all, there seems to be a variety of factors that tend to be consistent, indicating that DEFI will recover.
On the one hand, we have witnessed the emergence of several new Defi primitives, which are safer, scalable and mature than a few years ago.Defi has proven its elasticity and has become one of the few verified use cases and actual use fields in the encryption field.
On the other hand, the current currency conditions also support the recovery of Defi.This is similar to the situation of the previous DEFI summer. The current DEFI indicator shows that we may be at the beginning of a greater upward trend.
History will not repeat it, but it will always rhyme.
