After a year of almost uninterrupted growth, funds deposited in decentralized finance (DeFi) protocols have reached the levels of a year ago.
DeFi market on a year ago levels
The bear market of cryptocurrencies and the fall of the Earth ecosystem emerge as the main explanations for the fall.
Today, the DeFi industry accumulates a total blocked value (TVL) of $110.77 billion. The last time the value was at this level was in July 2021, after spending two months with an average of that value, according to data from the DeFi Llama.
Bad market conditions are the likely explanation for this decline. After all, as the price of major cryptocurrencies fell, so did dollar deposits in DeFi protocols.
In other words, although deposited cryptocurrencies remain the same, their price is lower and therefore they accumulate less TVL.
Another fact that marks the journey of DeFi this year (and will certainly continue to mark) is the disaster of the Earth network. This includes its Terra USD (UST) and LUNA cryptocurrencies, as well as the rest of its ecosystem, including the DeFi Anchor protocol.
The collapse can be considered a major factor in the current situation of DeFi, whose numbers began to drop significantly on May 7, hours after the start of the crisis with UST and LUNA.
With a loss of more than $27.6 billion of capital invested in its decentralized financial protocols, Terra has moved from the second network in DeFi, behind only the undisputed leader ETH, to the fifteenth position in this index.
Currently, Terra has $392 million blocked in its protocols. The value is far from the US$ 28.67 billion it had in the first week of May.
Meanwhile, in percentage terms, the network came to dominate 14% of the decentralized financial spectrum. But now it reaches only 0.46% in this regard.