DeFi, or decentralized finance, refers to non-custodial financial applications such as synthetic stocks, decentralized stablecoins, decentralized exchanges and lending protocols.
The DeFi market cap in July 31th hit $8 billion, and the total value locked up in its smart contracts in August 1st hit $4 billion; just two weeks ago, there was $3 billion locked up in its smart contracts, and $2 billion two weeks earlier.
DeFi protocols have become very popular recently due to the introduction of something called yield farming, where DeFi protocols offer users incentives for depositing their crypto with them (imagine it as another kind of interest for lending out your crypto). And most of these DeFi protocols live on Ethereum. Hence its boom.
DeFi’s rise has helped spike the entire crypto market cap. Following the crypto market’s ebb in mid-March, when its market cap crashed to $122 billion amid the shock to global markets caused by the pandemic, the crypto market cap has since almost tripled to $340 billion.
It’s also brought major tokens along for the ride. Bitcoin, still by far the largest cryptocurrency by market cap, today hit $11,600, an increase of about $2,000 since last Saturday. Bitcoin’s rise breaks its dry spell; it had hovered around $9,000-$10,000 for about two months.
