DappRadar analysts believe that 75% of the increase in USD-denominated Decentralized Finance (DeFi) locked assets was driven by the rise in the price of crypto assets.
According to a DappRadar report, the recent growth of the DeFi industry could be overstated. One of the most used metrics to gauge the size of an industry is the dollar amount of assets locked in DeFi apps. Funds can be locked in lending apps or used to provide liquidity for trading on decentralized exchanges.
In July, the volume of blocked crypto assets in DeFi applications reached $ 3 billion for the first time, and in mid-August this figure doubled to over $6 billion. However, analysts at DappRadar argue that the actual growth of DeFi may be much less active.
“75% of the total growth in the volume of assets blocked in DeFi applications in dollar terms was caused by an increase in the price of crypto assets,” analysts say.
DappRadar analyzed the work of the oldest DeFi project MakerDAO – at the end of July, the volume of blocked assets in the application reached $ 1 billion. Analysts found that 97% of assets were blocked in ETH (73%), WBTC (8%), and MKR (17%). Moreover, the prices of all three crypto assets have increased significantly over the past month.
“All three crypto assets have increased significantly in value over the past thirty days. The question arises how much their price influenced the volume of blocked assets in dollar terms, since this indicator may give a distorted picture of the development of the industry,” the report says.
For example, if the price of a crypto asset doubles, this will lead to a corresponding increase in the volume of blocked assets in USD. But if the number of crypto assets participating in applications does not change, then this means that new assets are not coming into DeFi products. DappRadar researchers noted that when the volume of assets blocked in MakerDAO reached $ 800 million, the growth was only $ 200 million after adjusting for inflation.
