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Market Action: Curve and MakerDAO Lead Rebound from December Selloff

The DeFi market rebounded from the December selloff.

Market Action: Curve and MakerDAO Lead Rebound from December Selloff

The DeFi sector has bounced back from its mid-December low, with total value locked (TVL) across the sector within 3% of its all-time high, while the combined capitalization of DeFi assets is up 24% since Dec. 13.

According to DeFi Llama, top-ranked protocol Curve has opened 2022 at new highs, with more than $24B now locked in Curve across seven networks. The TVL of second-ranked Convex Finance is also at record levels, gaining more than 9% this week to sit above $20B for the first time. 

MakerDAO ranks third with $18.2B after shedding 4.6% in seven days, followed by Aave with $14.6B after a 5.5% drawdown. In total, $253.6B is currently locked in DeFi protocols. 

Combined DeFi TVL Source: DeFi Llama

The Ethereum network represents 62% of the sector’s TVL, with the figure sitting at $158.1B after seeing little volatility this past week.

Terra, which has recently surpassed Binance Smart Chain to rank as the second-largest network by DeFi VL, surged at the end of 2021. While TVL doubled in one month to post a record high above $21B on Dec. 27, Terra closed December at $18B. Terra now represents a TVL of nearly $19.7B despite its fourth-largest protocol Terraswap’s value locked crashing 58% this past week.

Terra TVL Source: DeFi Llama

While most other leading networks have seen sideways TVL action in recent weeks, Fantom has grown 46.7% in two weeks to push into new highs and rank sixth with $6.6B.

Cronos, an EVM sidechain operating in parallel with both Ethereum and Cosmos, has also burst onto the rankings by amassing a $2b TVL since early December.

Market Cap

According to CoinGecko, the combined capitalization of DeFi assets has recovered to $157.5B, gaining 24% in three weeks. The DeFi market cap is still down roughly 9% from its early November all-time high of $173.B.

The sector’s top tokens have trended flat over the past week, with Terra (LUNA). Chainlink (LINK), Magic Internet Money (MIM), and The Graph (GRT) all down by between 6% and 8% for the past seven days. However, 10 assets among the sector’s top 100 are up by between 25% and 98% over the same period.

LUNA currently represents 21.2% of DeFi’s $157.5B market cap, ranking as the ninth-largest crypto asset overall with a capitalization of $33.4B. LINK is the second-largest DeFi asset with a market cap of $10.1B and 6.4% dominance, followed by Uniswap (UNI) with $9.04B and 5.7%. LINK and UNI rank 21st and 25th among all crypto assets respectively.

TOP GAINERS

Ribbon Finance (RBN) + 97.4%

Alchemix (ALCX) + 73.2%

Dopex (DPX) + 64.6%

Frax Share (FXS) + 63%

Keep3r (KP3R + 37.8%

BIGGEST LOSERS

Wonderland (TIME) – 23.5%

Bonfida (FIDA) – 19.7%

Trader Joe (JOE) – 18%

Benqi (QI) – 14.1%

Olympus (OHM) – 13.7%

L2 TVL

The TVL of Ethereum’s Layer 2 ecosystem continues to trend sideways since retracing from its late November all-time high, according to L2beat.

While L2 TVL is up 10% in the past two weeks, the sector is still down 18% from its Nov. 25 top of almost $7.2B. Roughly $5.87B is currently locked in second-layer protocols.

Market leader Arbitrum has grown by 6.6% this week, bringing its market share up to 45.2% at $2.65B. Second-ranked dYdX was stable at $975M, followed by Loopring and Boba Network with drawdowns of more than 8% each and respective TVLs of $547M and $491M. Optimism grew by just 2% to rank fifth with $452M.

Optimistic rollup network Metis Andromeda saw booming growth this week, having more than quadrupled its TVL in 10 days to rank sixth with $298M.

Burn Rate

Ethereum’s network activity has also seen a recent uptick, with the network’s seven-day burn rate sitting at 6.33 ETH per minute after slipping below 5 Ether every 60 seconds two weeks ago according to Ultrasound Money.

Rebounding interest in NFTs has added significantly to the burn rate, with the number of ETH burned by leading marketplace OpenSea increasing by more than double in the past fortnight. OpenSea destroyed 8,541 ETH this past week.

ETH transfers were the second-largest source of Ether burnt, removing 5,889 Ether from supply in seven days, followed by Uniswap v3 with 5,251 ETH, Tether with 2,539 ETH, and Uniswap v2 with 1,733 ETH.

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