The decentralized finance (DeFi) market has witnessed a significant revival in the first half of 2024 following a sluggish 2023. As of mid-August, the total value locked (TVL) within the DeFi ecosystem surged from $54.4 billion at the start of the year to $82.67 billion, marking an impressive 51.9% increase.
What Is Driving DeFi’s Expansion?
A key factor behind this surge is the heightened adoption of various blockchain ecosystems. Notably, the average daily trading volume for crypto derivatives has climbed from $1.8 billion in 2023 to $5 billion in 2024. Ran Hammer, Vice President of Business Development at Orbs, a Layer-3 blockchain network, credits this growth to a combination of market conditions, enhanced user interfaces, and improved trading tools.
Hammer pointed out that the previous bull market, along with advances in user interface (UI) and user experience (UX), lower latency, and enhanced monitoring tools for copy trading and wallet tracking, created an optimal environment for leveraged trading in the DeFi space.
Who Are the Key Players and Innovations?
The first half of 2024 not only experienced increased volumes but also saw the introduction of pre-market crypto offerings, enabling investors to trade tokens before their official launch. This innovation has attracted significant interest from new market participants and spurred competition among established players.
While dYdX remained the market leader, it faced growing competition from emerging protocols like SynFutures, Hyperliquid, and RabbitX. These newer projects, unburdened by native tokens, focused on product development and user acquisition, which allowed Hyperliquid to achieve daily trading volumes exceeding $1 billion, thus overshadowing dYdX.
Actionable Insights for Investors
Investors can draw several actionable insights from this market trend:
- Consider platforms with strong UI/UX improvements and lower latency for better trading experiences.
- Look into emerging protocols like SynFutures and Hyperliquid that are gaining traction without the complexity of native tokens.
- Watch for pre-market crypto offerings to capitalize on early investment opportunities.
The competitive landscape of DeFi in 2024 demonstrates that projects maintaining fully on-chain operations while offering performance and fees comparable to centralized exchanges (CEXs) are gaining an edge. SynFutures, for example, became the second-highest performing perpetual DEX in Q2 2024, with over $98 billion in cumulative trading volume.