Bitcoin (BTC) locked in DeFi hits ~ 2-year high

The decentralized finance (DeFi) space posted a mild recovery after the market-wide meltdown.

According to DeFi Pulse’s latest chart, Bitcoin locked in DeFi has surged to 222.2k BTC on the 6th of December. With this, the figure registered a two-year high. Last time, BTC locked in DeFi was hovering close to this level was during mid-January 2020.

The latest rise comes as several protocols across the DeFi market saw an upswing after weekend sell-off. Currently, dominating the scene is Ethereum based- lending platform Maker with 52.6k BTC. Trailing behind is DeFi protocol Compound contributing 34.3k BTC followed by decentralized exchange Curve Finance with 32.9k BTC.

Simultaneously, the total value locked (TVL) in USD saw a sharp spike of 15% from a low of 87.94 billion on the 5th of December to the press time figure of 101.2 billion. Ethereum locked in DeFi also has made a considerable comeback. At the time of writing, the value stands at 9.7 million ETH- a two-months high, as per DeFi Pulse chart.

Total revenue in DeFi intensifies

Investor interest across decentralized finance has maintained an upward trajectory despite a few bumps along the way. The rapid proliferation of Ethereum rivals, offering cheaper and time efficient services, in the industry has further catalyzed this trend.

According to Token Terminal, daily total revenue in the past six months across top decentralized applications has been on the rise. Platforms such as OpenSea, UniSwap, PancakeSwap, dYdX, SushiSwap etc. has maintained an uptrend. Total revenue is essentially total fees paid by the users. Hence, the above chart shows user optimism.

Attracting malicious entities

As the value locked in DeFi shoots, the interest of the hackers and exploiters piques. As per the mechanism, the industry is able to self-regulate. It is important to consider the increasing exploitation of decentralized protocols. Since this industry is burgeoning at an immense scale, it is also becoming lucrative for malicious entities.

According to a London-based firm, Elliptic, billions of dollars of funds have been stolen across DeFi products.  The space has always been associated as the ‘Wild West’ of cryptocurrencies. Since there is no involvement from third parties such as banks, high interest rate savings and lending products seem to be a common practice. However, since it is still at a fledgling state, DeFi platforms suffer from various security issues.

The total losses  incurred due to this breach has totaled $12 billion in 2021. In addition, there has been a significant rise in, “rug-pulls” too. It is a scam where fraudsters after convincing investors and raising a significant amount, take off.