DeFi market

What is DeFi?

The traditional financial infrastructure is full of bureaucracy, inefficiency, and censorship. A handful of financial institutions hold the power to weigh down the global financial markets.

Decentralized finance (DeFi) aims to liberalize the financial ecosystem by building an open, trustless, permissionless, and cost-efficient financial framework. The DeFi industry has started building momentum with first-generation DeFi platforms garnering attention across the world.

DeFi market

DeFi market status at press time:

  • The DeFi crypto market cap is over $80B.

  • Total value locked (TVL) is about $120B and that shows better results than the 2017-2018 ICO boom at the corresponding stage and yet represents only 5.6% of the whole crypto market ($1.6T). The growth potential for DeFi is huge even if the whole crypto market would stop growing in market capitalization.

  • The DeFi derivatives market grew 210x in a year, but still is only about 7% of the whole DeFi market.

  • Both WETH & WBTC now make up roughly 1% of their total supply (wrapped coins are mainly used for DeFi related transactions). In the meantime Bitcoin is the 10th largest asset by market cap in the world, Ethereum - 36th.

  • ETH and BTC options should reach roughly $9.2 billion by 2023.

  • Nexus Mutual insurance pool is currently over $400M.

Average APY: Traditional vs DeFi

Current DeFi market is mostly propelled by the crypto community, but earning opportunities are obviously more rewarding in DeFi over the traditional markets and this alone should attract lots of traditional investors eventually. Some will get into DeFi directly, but most, we predict, will use some kind of intermediary to help mitigate the risks, better manage the portfolio and simplify the process overall. APY at traditional markets mostly varies from -0.1 (negative) to 14% while DeFi offers at least 1.7% (low risk stable coin lending) to over 30% to those that are willing to take risks.