The total value locked (TVL) across all decentralized finance (DeFi) platforms made a new high this week, amounting to over $200 billion, according to analytics platform DeFi Llama. This is the first time TVL across DeFi platforms has reached this milestone.
Just about a month ago, it was reported in DeFi Q3 Report by DappRadar that the DeFi space had around $178.12 billion in TVL. In the last quarter alone, TVL in the DeFi industry grew by 104%, peaking at $195 billion on September 6.
The recent China clampdown may have boosted TVL on DeFi platforms. This is because DeFi is a network of permissionless financial protocols that are not subject to centralized regulations. A day before the news of the China crypto ban (23 September), TVL on Defi platforms was shy of $180 billion. By 8 October, it had climbed up to $204billion.
Following the recent China crypto ban in September, analysts had predicted that crypto investors would most likely move their funds to the DeFi space. Perhaps the Chinese government is hoping that once these investments are cut off, the crypto-mining industry specifically would be snuffed out eventually.
The China crypto ban therefore may just have been a blessing in disguise, at least for DeFi platforms and investors.
Even in the crypto market generally, though cryptocurrency or crypto asset prices dropped in reaction to news of the China crypto ban it didn’t take long for the market to recover. Since the ban was made, many assets have done over 15 percent increase.
But the Chinese government is not done with the crypto industry just yet. It has recently added cryptocurrency mining to the draft ‘negative list’ of industries in which investment is restricted or prohibited. If the draft is approved, both Chinese and foreign investors would be prohibited from investing in the crypto-mining industry.
But many players believe that the global crypto market is significantly weaning itself off China, a development which is generally expected to reduce FUD, and consequently crypto volatility.
Whether China’s next move would cause another FUD in the crypto market is left to be seen in the next couple of weeks.
At the time of publication, the TVL is down by 5.66%, bringing the TVL to $192 billion.
What could this scoop mean for the crypto asset buyer?
As centralized finance (CeFi) characterized by middlemen including regulated or legal entities continue to experience regulatory issues globally, DeFi adoption is expected to increasingly grow. Consequently, DeFi projects are expected to attract new users and more capital. From Ether to BSC, Solana to Polkadot, and others, a window of investment opportunities is expected to open up to the crypto asset buyer. Whatever you decide, beware of scam projects as well as fraud in the “wild wild West” of the DeFi space.