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– Bitcoin, cryptocurrencies and blockchain technology.

According DeFi Pulse Total Blocked Value (TVL) on decentralized finance projects – a metric that tracks the amount of assets involved in the DeFi ecosystem – has risen to $ 18 billion.

Correct interpretation of TVL

While the chart may suggest that DeFi adoption is on the rise, it does require proper interpretation to be properly understood. The total locked value is often an imperfect metric. Differences in the way it is calculated, protocols adopting measures to stimulate it artificially, or simply an increase in the price of the underlying asset can create the appearance of an increase where it is not.

Adjusted TVL metric by DappRadar, which computes the total value locked by an asset price fixing at the start of the period under study, sheds some light on this.

The adjusted metric suggests that, since October 2020, DeFi has actually seen very modest growth. Measured at constant prices, the total locked value remained at around $ 9 billion for the entire Bitcoin (BTC) and Ethereum (ETH) bull market. This means that no new assets have entered DeFi. It is the existing supply that has increased dramatically in terms of value.

SushiSwap drives DeFi

Nevertheless, between January 4 and January 5, there was a significant jump in TVL, which is largely related to SushiSwap. The decentralized stock market continues to attract massive amounts of capital with SushiSwap Awards. The Onsen menu has recently been introduced to the project. It is intended to provide incentives for a rotating set of liquidity pools, including primarily smaller tokens. In one day, the exchange attracted around 2,000 BTC (USD 62 million), Dai 40 million and ETH 60,000 (USD 60 million).

Another major source of TVL’s growth is Synthetix Network Token (SNX), however this increase can largely be attributed to the 30% increase in the SNX price. The token is used to secure the synthetic assets emitted on the platform, so an increase in its price still has a direct impact on platform adoption.

Even though inflows into DeFi have remained steady recently, this space still shows healthy volume and adoption. Ethereum’s high fees are likely to stifle further growth, but emerging scaling technologies could soon fill this gap.

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