Terra and Fantom Are Pumping Even as DeFi TVL and Ethereum Burn Rate Drag

Terra and Fantom have rebounded in the last seven days but overall DeFi TVL's uptick is modest.

By: Samuel Haig Loading...

Terra and Fantom Are Pumping Even as DeFi TVL and Ethereum Burn Rate Drag

DeFi tokens are rallying. Terra is up 54% in the last seven days, and Fantom has spiked 21%.

Indeed, six of the top 100 by market cap are up by more than 50% over the past seven days, and 40 are enjoying double-digit gains for the week according to CoinGecko. The combined DeFi market cap is almost $122B after slipping below $100B on Feb. 22.

Yet the growth of the sector’s total value locked (TVL) has been more modest, with Ethereum and Solana up just 5% from their respective local lows, while Binance Smart Chain and Polygon have bounced by 3%, according to DeFiLlama.

Ethereum’s burn rate has also plummeted, currently sitting at 3.68 ETH per minute on average for the past week — a drop of more than two-thirds from its January highs.

So is DeFi activity declining? Or has it migrated away from the chains that drove the 2021 boom for decentralized finance?

One factor is the velocity with which the sector’s market cap fell amid the recent downturn, with most leading tokens losing at least half of their value. By contrast, the combined DeFi TVL dropped by 27% between late November and early February.

Terra Resumes its Rise

Terra has resumed its rise toward the top of the DeFi rankings. Its TVL has surged to new all-time highs to tag $23.5B, almost double its level five weeks ago.

The network’s top four protocols posted dramatic growth in recent weeks. Terra’s largest protocol Anchor is up 63% in 30 days, which is followed by Lido with a 68% gain, and Stader with 179%. However, Anchor and Lido account for 82.5% of the network’s TVL, highlighting that Terra’s performance has been driven by the growth of just a few protocols.

Terra TVL. Source: DeFi Llama

Anchor’s growth comes after the Luna Foundation Guard (LFG) injected $450M into the protocol to continue subsidizing its roughly 20% yields. The move followed a Feb. 8 governance proposal calling on the LFG to step in and rescue its treasury from depleting by the end of February. Researcher ‘N3mo’ predicted that Anchor will be self-sufficient come November.

Terra’s native LUNA token has followed with a gain of 55.9% in seven days. The token currently represents 28.5% of the combined DeFi market cap with nearly $34.8B, and ranks the seventh-largest crypto asset overall. LUNA is now just 10% shy of its all-time high, having almost fully recovered from the loss of more than 50% it sustained during January.

Fantom Recovery

Fantom has also posted surging growth in recent days. Fantom’s TVL is currently at $11.65B, up more than 60% from $7.25B on Feb. 22.

The majority of Fantom’s recovery can be attributed to Solidly, a new DEX from Yearn Finance founder, Andre Cronje, and Solidex, a yield optimizer built on top of Solidly. The two protocols have grown by 500% and 718% in the past seven days respectively, adding roughly $4B to Fantom’s TVL between them.

The network’s top dapp, Multichain, has also posted a strong week with TVL growth of more than 33.5%. Multichain now represents a TVL of more than $6B.

Fantom TVL. Source: DeFi Llama

Fantom’s FTM token has bounced 20.7% amid the impressive growth. Despite the gain, FTM is still down 45.5% from its October all-time high.

Avalanche Holds Strong

Avalanche has held strong in recent weeks. The network’s TVL posted a strong recovery from its late January lows of $8.1B, pushing above $10B roughly one week later. While other leading networks saw a secondary retracement during February, Avalanche has not slipped below $10B since early February. Avalanche’s TVL is currently $11.2B.

Seven of the network’s top ten protocols have posted double-digit growth over the past 30 days. Aave leads with $3.3B after gaining 33%, followed by TraderJoe with $1.5B and a 26% gain, while Curve rounds out the top three with $1.2B after gaining 26.6% for the month. Fifth-ranked Platypus Finance is also up 83% with a $1B TVL.

Avalanche TVL. Source: DeFi Llama

The AVAX token is up 20% this week, but remains down by 43.5% from its November high. It is the tenth-ranked crypto asset overall.

CORRECTION @ 4PM ET 3/3 – This story was updated to reflect that Solidly was launched by Andre Cronje and Solidex is a separate protocol.