As per Apollo Crypto, the DeFi infrastructure has witnessed a significant boost over the past few years with the goal of establishing “an abundance of cheap block space”.
The decentralized finance (DeFi) market is preparing for the second wave of growth as per the latest report from Apollo Crypto, an investment management firm specializing in digital assets.
After the peak of the “DeFi Summer” back in 2020, the sector faced a major slowdown. However, in recent times, DeFi protocols like Aave, Uniswap, and Maker have gained a lot of popularity. “As of today the total DeFi TVL sits at approximately US$105 billion with many calling for the resurgence of DeFi and a return to the strong fundamentals it offers,” noted Apollo Crypto in its latest report.
The report also mentions some of the macroeconomic developments as the driving force behind these developments. This includes the recent Fed rate cuts along with the monetary easing measures undertaken by the Chinese central bank PBoC with a more than $140 billion infusion. Apollo Crypto noted that these macro developments have been driving the DeFi growth.
The report stated that the central bank rate cuts have created an attractive option for risk-on assets, including digital assets such as Bitcoin BTC $111 391 24h volatility: 2.6% Market cap: $2.22 T Vol. 24h: $52.84 B , Ethereum ETH $4 316 24h volatility: 1.2% Market cap: $520.93 B Vol. 24h: $34.36 B , and other altcoins. It mentions a major boost for decentralized finance (DeFi) from the PBoC decision to reduce short-term interest rates.
“Historically the performance of Bitcoin has been positively correlated with the PBOC’s total asset growth … and as such this proves to be another possible bullish catalyst,” noted Apollo Crypto.
DeFi Infrastructure and UX Improvements
As per Apollo Crypto, the DeFi infrastructure has witnessed a significant boost over the past few years with the goal of establishing “an abundance of cheap block space”. This infrastructure development has allowed several decentralized applications (dApps) to access the block space “with more performant speeds”, as well as the lowered transaction costs on several Layer-2 scaling solutions.
Apollo Crypto highlights Coinbase’s cbBTC, a tokenized version of Bitcoin, as a potential game changer that could draw capital into the DeFi space, providing an alternative to traditional exchange-traded funds (ETFs). The Apollo Crypto report noted:
“When a user sends bitcoin from their Coinbase account to an address on the Ethereum or Base network, the BTC is now automatically converted into cbBTC at a 1:1 ratio, this will allow users to rotate from BTC into alternative crypto assets with more ease than ever.“
The report also adds that Aave is leading the decentralized lending market while Uniswap dominates as the decentralized exchange with the highest trading volume. While Maker remains recognized as a key driver in the DeFi revival, its recent rebranding to the Sky ecosystem has received mixed feedback.
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