According to numerous data platforms on the sector, the total value of the DeFi market is decreasing. The entire value locked in DeFi has declined by nearly 18% since the beginning of the year, from $236 billion at the end of 2021 to $199 billion as of May 2.
There isn’t a single platform that has seen such a drastic reduction. Instead, most major protocols and platforms have experienced a significant decrease in TVL, frequently in the double digits. Curve, Lido, MakerDAO, Aave, Compound, and PancakeSwap are among them.
It’s unclear why the DeFi market has seen such a significant reduction.
The crypto market has been struggling in general, but the DeFi market has proven to be somewhat more resilient to fund withdrawals. It is frequently used by investors to generate passive income by contributing to liquidity pools and other features.
The last two months have been especially difficult for the industry. Trading volumes on the DEX also decreased in April. These volumes were around $92.1 billion last month, down from $117 billion in March.
Regulators have been paying increased attention to the DeFi business. Although it’s unlikely that this is the reason for the niche’s decline, it’s worth noting that it could be in for a lot more in the near future.
What is DeFi’s outlook for the rest of 2022?
DeFi is a cornerstone of the crypto market, therefore any changes there have a big impact on the rest of the market. It is, at the very least, one of the most active crypto industries in terms of both usage and development activity.
DeFi has had a bad year thus far in 2022. Several cyberattacks have occurred, with over $1.2 billion taken from projects working in the industry in 2022 alone.
There’s also the issue of regulation. Unhosted wallets and DeFi in general are being investigated by international authorities. They want to bring the market under control, which the International Monetary Fund (IMF) says is posing financial concerns. It’s unclear how authorities expect to govern a decentralized market, but they’re taking moves in the right direction.
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