- Key Drivers of DeFi’s Revival
- Top DeFi Tokens
- DeFi’s Growth Potential in 2024
DeFi’s popularity is at a six-month peak, currently ranking third behind AI and Memes among all narratives. Decentralized finance (DeFi) is poised for a significant rebound, with total value locked (TVL) in the crypto space expected to reach an all-time high in the first half of next year, according to a recent report from Steno Research.
Key Drivers of DeFi’s Revival
The main driver of DeFi’s revival is lower interest rates, particularly in the U.S., which attract investors to higher-risk opportunities in decentralized finance. The current climate mirrors the first DeFi summer in 2020, which followed Federal Reserve rate cuts during the Covid outbreak.
The rise of stablecoins, which have increased by about $40 billion since January, is a major boost for DeFi. Stablecoins are essential for DeFi protocols, and decreasing interest rates make holding them more attractive.
The routes of DeFi’s revival also pass through the tokenization of real-world assets (RWAs). The issuance of real-world assets such as tokenized stocks and bonds has surged by 50% this year, reflecting strong demand for on-chain financial products and contributing to DeFi’s resurgence. Institutional liquidity will soon make RWA tokens usable for trading, hedging, lending, and borrowing worldwide as more real-world assets are tokenized on public networks.
Reduced transaction fees on the Ethereum network, the primary blockchain for DeFi, further enhance the accessibility and appeal of decentralized finance. Many analysts believe that historically, a major drop in Ethereum’s gas fees often signals a potential price bottom.
Top DeFi Tokens
The top 3 DeFi crypto tokens that have the potential to outperform top altcoins during the upcoming bull run:
Stacks (STX) is on a roll, up 9.44% in the past day and 12.53% over the week. It’s gearing up to test resistance at $1.675. If the trend persists, STX could aim for $2.135. However, a reversal might pull it back to $1.230.
AAVE has risen 25% over the past week, shattering an almost two-year accumulation range. Whales still buy AAVE, with on-chain data revealing more purchasing pressure than selling on decentralized exchanges. AAVE may rise to $170.
Maker (MKR) is a popular decentralized exchange and stablecoin project. MKR climbed 5% in 24 hours to $1.883 billion of market cap and ranked 46th. Key indicators like MACD are increasing bullishly with a 22.89% year-to-date gain. The bullish trend might push MKR to $2,630. Otherwise, it may fall to $1,700.
DeFi’s Growth Potential in 2024
With these factors in play, DeFi could reach new highs by mid-2024. Since its bottom in August, it has gone up 83%, and is currently trading at $0.02355.
Considering the current trends and factors such as lower interest rates, the rise of stablecoins, and the tokenization of real-world assets, DeFi is likely to experience significant growth in 2024.
