For the first time in six months, the total amount of capital locked or staked across all Decentralised Finance (DeFi) protocols reached $50 billion on Tuesday, as investors looked to secure a yield on their cryptocurrency holdings and the value of underlying assets surged.
DefiLlama data indicates that the sector has grown by $15 billion since October 13, when it was at multiyear lows.
Last week, Blast—a recently announced layer 2 project with hopes of going live in 2019—received deposits totaling over $700 million from traders and investors, unfazed by the fact that assets cannot be withdrawn until at least March. This was an example of the search for yield.
The main asset used in the DeFi market, ether (ETH), has increased by 42% since October 13. This is more than the 41% increase in the DeFi market as a whole. It is noteworthy that a considerable percentage of DeFi protocols provide yields on stablecoins, which are linked to conventional fiat currencies such as the US dollar, the euro, or the British pound.
The amount of transactions has also increased: last month, on a single day, over $5.4 billion was exchanged, the highest amount since March.
When Ethereum switched to a proof-of-stake blockchain earlier this year, holders could stake ether to become network validators and earn rewards, which gave the industry a boost.
. The change stimulated the market for liquid staking, driven by companies like Lido and RocketPool, which together account for 45% of DeFi’s total value locked (TVL).
As of right now, Lido offers an annual yield of 3.7%, while RocketPool offers 3.92%. Through a type of derivative known as liquid staking, investors can stake ether and earn a token that can be used in various parts of the DeFi ecosystem.
With institutional interest in Solana continuing to grow, TVL on Solana-based protocols, marginfi, Jito, and Marinade Finance, has increased by 60% to 120% in the last 30 days. Last month, Grayscale’s Solana Trust traded at an 869% premium, indicating strong institutional market demand.
With a yield of 6.96%, Jito, Solana’s liquid staking protocol, attracts $327 million in inflows since October 13.