Today in Markets

The Return of DeFi

BTC's up big, but the resurgence of DeFi's TVL is also a must-watch development right now.
Feb 10, 20241 min read

Bitcoin had a standout week, climbing 10% in 7 days and momentarily surpassing $48K, the first time this price has been reached since the introduction of BTC ETFs in the U.S. Also on the rise, though? DeFi’s aggregate total value locked (TVL), which, if you include liquid staking projects, just breached the $100B mark for the first time in roughly two years.

This TVL resurgence can be attributed to a variety of factors, not least among them being EigenLayer’s tremendous recent growth, the blooming of liquid restaking projects, and attractive yield opportunities returning from overall increased activity onchain. 

That said, during the recent bear market some analysts wrote DeFi off as having its best days behind it, yet this recent TVL revival shows that new categories of activity can help push the space to new heights going forward. In reality, the party’s likely only just getting started here. 

As Bitcoin continues its ascent, buoyed by new institutional demand and the Lunar New Year, DeFi’s recent TVL growth shows more crypto investors are also once again going out deeper on the risk curve looking for higher beta bets.

And even if things turn bearish in the cryptoeconomy anew, we can expect expanding capital lock ups from the liquid staking and restaking sectors to act as fresh backstops against landslides downwards. DeFi’s become a different beast this time around, in other words, and its position right now is decidedly one of growing strength.

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

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