DeFi growth helps push crypto’s share of the global money supply above 2%

1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDUvNjIxNmYxNjYtNDRjNS00NzBkLWE1MmMtNTY0NTZlZGRjMDQ4LmpwZw.jpg
Fiverr

[ad_1]

This year decentralized finance (DeFi) has proven to be a transformative sector for the cryptocurrency ecosystem and it is also making waves in among global financial markets as institutional investors become entranced with the potential to earn high yields on stablecoins, altcoins and Bitcoin. 

While the price action from Dogecoin (DOGE) has dominated the headlines in recent weeks, Delphi Digital has been chronicling the growth of the DeFi ecosystem on the Ethereum (ETH) network which has steadily been gaining strength over the past month.

b4c3a67e 58fc 46aa a0f8 608204d75fb1
Ethereum DeFi performance year-to-date. Source: Delphi Digital

According to Delphi Digital researchers, while the majority of growth occurred on Ethereum-based DeFi platforms, protocols across the top ecosystems including Ethereum, BSC, Solana (SOL), Avalanche (AVAX), Polygon (MATIC) and Terra (LUNA) have begun to gain traction and now account for 34% of the total value locked in DeFi.

d63a2691 ec8e 491f 9997 b7f0dabe90d3
Multi-chain DeFi total value locked. Source: Delphi Digital

The BSC ecosystem is the second-fastest-growing DeFi ecosystem behind Ethereum, thanks in part to its connection with the Binance ecosystem which has immense resources to help get its native protocols off to a strong start.

Ledger Nano X - The secure hardware wallet

Venus (XVS), PancakeSwap (CAKE) and PancakeBunny (BUNNY) are the three top DeFi protocols on the BSC and the total value locked on the network totals $49.1 billion.

17146c2d 38cd 4036 b5c4 25aed27e6edf
Total value locked in DeFi on the BSC. Source: Defistation

Collectively, all layer-1 ecosystems have now surpassed $130 billion in cumulative total value locked (TVL).

Stablecoins form the foundation

According to Delphi Digital, DeFi native stablecoins have played a major role in the growth of the ecosystem and now account for nearly $10 billion of the total market cap.

Dai’s (DAI) circulating supply recently surpassed the $4 billion mark to establish itself as the largest DeFi stablecoin, while UST is a rapidly rising challenger fr the Terra ecosystem.

d6dfa0bc e6f5 40eb a392 bea07a9e7dde
DeFi stablecoin market caps. Source: Delphi Digital

From a wider market perspective, the growing circulating supply of the top stablecoins projects (USDT and USDC) has further helped to boost the value of the crypto sector as a whole by providing a simple way for new funds to enter the market.

To highlight the significance of the growth in the cryptocurrency ecosystem, Delphi Digital points to the global M2 money supply, the broadest definition of the money supply.

41f921e6 6eac 49e0 b04e 30b92a76e11b
Cryptocurrency percentage of total global money supply. Source: Delphi Digital

Due to gains made across the cryptocurrency ecosystem since mid-2020, the cumulative market cap of the crypto market is now more than 2% of the global M2 money supply with Bitcoin (BTC) alone accounting for 1%. Collectively, the rest of the crypto market accounts for about 1.2% of the global money supply.

As signs of increased cryptocurrency adoption arise on a near-daily basis, like the May 6 revelation that Goldman Sachs had launched a crypto trading desk, it’s likely that the amount of funds locked in DeFi will continue to rise alongside crypto’s share of the global money supply.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

[ad_2]

Source link

[wp-stealth-ads rows="2" mobile-rows="3"]