DeFi: industry figures drop again

Since peaking in May 2021, decentralized finance (DeFi) market values have begun a slow descent that does not seem to be hinting at stopping. 

On average, the DeFi sector is now 65% below its May peak, with most DeFi tokens experiencing even higher drawdowns. 

This is according to a recent report released by CoinShares two days ago.

Prices of DeFi tokens drop

The second quarter of 2022, according to the report’s findings, proved to be one of the worst quarters for DeFi tokens. Indeed, prices of the best projects in the decentralized finance industry fell more than 65% on average against the US dollar. 

DeFi‘s TVL (Total Value Locked) fell in the second quarter of 2022 by 70% to $70 billion, down from $230 billion in April 2022. 

Certainly, the declines were strongly influenced by the collapse of the Terra ecosystem, which resulted in a loss of confidence throughout the decentralized finance system.

Addresses on Solana go up

As for active addresses, these fell for almost all blockchains, except for those based on Solana, which also grew by 84,000 in Q2 of the year. 

Also interesting is the look at the individual DeFi sectors analyzed by the report, from which there is great growth in bridges, or those projects that allow resources to be passed from one blockchain to another.

Increasing exchanges and volumes on DEXs

During the second quarter of 2022, despite falling prices and relatively low on-chain activity, trading volume among decentralized exchanges rose and averaged more than $95 billion per month with more than 100 million DEX visits per month.

Overall, the report comes to the conclusion that the second quarter of 2022 was a negative period for DeFi, replicating and in some cases worsening the poor performance of the first quarter of the year. 

This is certainly also driven by the fact that the industry was coming off a real breakout in 2021, which is why the experts who authored the report see DeFi as still having great resilience and attractive growth prospects for the future.

However, and this is perhaps the aspect that needs to be worked on most for the near future, DeFi has a range of challenges which includes poor, if not totally absent, regulation, educational issues, technologies, and economic challenges relative to traditional finance.