DeFi’s TVL hits new highs as Metaverse tokens cool down

Metaverse tokens are starting to cool off as DeFi platforms see steady inflows, pushing the industry’s Total Value Locked (TVL) to an all-time high (ATH).

Sentiment in the crypto market picked up again on November 29th as the recent decline in the “extreme fear” zone of the Crypto Fear and Greed Index improved slightly after Bitcoin rebounded above the USD 57,000 support, which the index did into the “fear” zone.

Crypto Fear and Greed Index | Source: alternative.me

Although “fear” and “extreme fear” have hit the market since the decline began on Nov.

The rapid growth of these projects has raised some concerns that the Metaverse and gaming sectors could correct significantly in the short term as retailers take profits and wait for more sustainable prices. Many in the industry are pondering which sectors will continue to gain momentum and drive prices up.

A deeper dive into the available data shows that the DeFi sector has stabilized in recent months, as TVL rose to an ATH of $ 276.92 billion on Nov. 9 and is now at $ 265.74 billion. Dollar lies.

Total value locked in DeFi | Source: Defi Lama

The rise of TVL comes with the introduction of new protocols on Ethereum-compliant networks like Fantom, and Layer 2 solutions like Arbitrum offer users the ability to conduct transactions in a low-fee environment.

DEX activity increased

Another sign that activity at DeFi is picking up is the volume of trading on decentralized exchanges (DEXs) like Uniswap and SushiSwap, which have seen a sluggish spike in activity since the market bottomed out in mid-July.

Total trading volume on decentralized exchanges | Source: Token Terminal

As can be seen in the graph above, the trading volume of the top DEXs is now steadily returning to the level seen during the bull market in the first half of 2021.

One of the most notable changes is the addition of activities from dYdX, a decentralized Layer 2 futures and perpetual futures exchange, which surprised early adopters last month 9 when they airdropped their new governance token to users who had previously joined.

Since its inception, dYdX has been the first choice for decentralized options trading in the crypto market and its trading activity has suddenly surpassed that of spot trading on the leading US exchange Coinbase.

One final piece of evidence that DeFi activity is on the rise, along with the underlying sentiment the market is moving into, is the volume of credit on major lending platforms, which is currently near an ATH of $ 35 billion.

Volume borrowed on credit platforms | Source: Token Terminal

This suggests that holders are locking tokens as collateral in order to obtain credits that can be used for crypto and DeFi related activities. And of course, many are looking forward to the bull market continuing as the ecosystem prepares to close in 2021 and get off to a hot start in 2022.

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