Despite the crypto market's recovery, DeFi assets and value locked show bearish signals. DeFi dominance has fallen to levels unseen since early 2021.
Decline in DeFi Dominance
DeFi token dominance has dropped to 3%, the lowest since early 2021. During this market cycle, dominance increased to 3.71%, far below the 5.9% seen during the 2021 bull cycle.
Current DeFi Token Market Status
Top tokens like Uniswap (UNI) and Aave (AAVE) did not meet growth expectations. The current low dominance might be seen as a buying opportunity, but the market remains stagnant with no signs of recovery after months of sideways trading.
DeFi's Response to Market Slowdown
DeFi has responded to multiple market cycles, reviving post the 2022-2023 bull market. However, TVL never returned to the 2021 peak. Most liquidity moved into Aave and Sky Protocol, with similar apps on Solana and other networks. DeFi has been used to tap into holding stablecoins despite slowing synthetic asset growth.
DeFi continues to be a vital part of the crypto ecosystem, but its reliance on bull markets requires strategy adaptation for sustained growth and new opportunities.
