Cardano DeFi Cracks Top 10 as TVL Explodes

• Cardano enters the top 10 DeFi blockchains.
• Cardano TVL has exploded over the past month.
• Cardano DeFi tokens are experiencing a boom.

After sinking to a yearly low of $36.7 billion in mid-October, total value locked (TVL) across all decentralized finance (DeFi) protocols staged a recovery over the past six weeks. Cardano, in particular, has been among the top gainers during this recovery phase, entering the top 10 DeFi protocols for the first time after posting a 49% increase in TVL over the last month.

Cardano DeFi Booms

Cardano’s recent TVL increase places it ninth in the top 10 DeFi protocols, edging marginally above Cronos but significantly below eighth-placed Optimism, which has more than double the value locked at the time of writing.

DeFi Llama data shows that the TVL in the Cardano blockchain has hit a new all-time high of $380 million, growing 49% since November 11, when its TVL amounted to $255.7 million.

Cardano’s total value locked (TVL) has been on an upward trend since the beginning of the year, opening at $49 million and reaching $187.2 million by mid-July. However, DeFi investors pulled back, leading to a downtrend that bottomed out by late September. Since then, Cardano’s TVL has been on the rise, culminating in a sharp increase in October and a vertical uptick since December as wider market increases took hold.

According to Velvet Capital, the sharp increase in Cardano TVL demonstrates a shift in narrative from hype and useless protocols to real utility. Velvet Capital expects Cardano DeFi protocols and their associated tokens to provide a surprise when markets go full bull mode.

Native DeFi Tokens

The top three Cardano DeFi protocols by TVL are Indigo, which grew 51% over the past month to $92.4 million; Minswap, which grew 42.4% to $82.9 million; and Liqwid, which increased 62.2% to $44.1 million.

Indigo is a collateralized debt position protocol similar to MakerDAO on Ethereum, enabling users to collateralize funds to create synthetic assets. Minswap offers a user-friendly decentralized exchange (DEX) experience, including yield farming. Liqwid opens up lending and borrowing opportunities.

Despite the weekend sell-off, INDY, MIN, and LQ grew 31.4%, 44.5%, and 70% over the past month at the time of writing.

On the Flipside

• Ethereum’s TVL accounts for over half of the DeFi market versus Cardano’s 0.8%. 
• The US Securities Exchange Commission recently redefined “exchange” to include DeFi, casting regulatory uncertainty over decentralized finance. 
• Cardano DeFi officially launched in Jan 2022 when the first Cardano DeFi protocol, MuesliSwap, went live.

Why This Matters

Cardano’s ascent in the DeFi space has demonstrated a demand for a more purpose-driven approach to DeFi. With Cardano’s DeFi ecosystem still in its early days, holders of native tokens are undoubtedly excited for the road ahead.

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