The DeFi sector has consistently been in the news for quite some time now. Several DeFi platforms and tokens have grown impressively, pulling in mouth-watering volumes and returns. However, a new report suggests that the growth and success of the sector just might be exaggerated.
According to a report from DappRadar, a decentralized app (DApp) tracker, there’s a good chance that the DeFi sector’s growth might not be as much as the rest of the market thinks.
For example, the total value locked (TVL) is one of the most significant metrics used in the DeFi sector. TVL shows the amount of value different apps have locked up in the sector. Last month, the DeFi sector’s TVL hit $3 billion. A few days ago, this figure had skyrocketed and crossed the $6 billion mark. Regardless, the DappRadar has basically called the DeFi’s bluff. The report says:
“To conclude, 75% of the total value locked increase was fueled by a token price.”
The report suggests that only about 25% of the sector’s recent pump comes from actual funds pumped into DeFi.
DappRadar also analyzed MakerDAO. The MakerDAO platform is behind 24% – about $1.5 billion – of the entire value the sector has pulled in. According to the report, 97% of this is in Ethereum, Wrapped Bitcoin and the MKR token, at 73%, 8%, and 17% respectively. These three tokens have spiked recently.
The report says that this “raises the question, how extensively token price affected the TVL metric.” DappRadar then adds that viewing TVL in dollars could give “a distorted view” of the sector.
Image Credits: Pixabay
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