A new DappRadar report is sounding the alarm over the sharp decrease of capital residing in the decentralized finance (DeFi) subsector.
The report highlights that the total value locked (TVL) in the DeFi space witnessed a massive 70% decline in just eight months.
According to the data acquisition and analysis firm, DeFi’s TVL hovered around $250 billion at the start of the year. The report says that DeFi’s TVL now stands at $74.21 billion, which it notes is an ‘alarming decrease.’
The TVL of a blockchain represents the total capital held within its smart contracts. TVL is calculated by multiplying the amount of collateral locked into the network by the current value of the assets.
The DappRadar report points to the sanctions imposed by the US government on crypto mixer Tornado Cash as a catalyst for the decline in DeFi’s TVL.
“(August) has been particularly difficult for the market because of the Tornado Cash crisis, and the TVL fell 10.47% month-over-month, losing about $8.7 billion.”
Standing out among its peers, Ethereum (ETH) remains the most popular chain, the report says.
“Ethereum continues to be the most prominent chain, controlling 69% of the DeFi TVL with $51.47 billion, which is 11% less than last month and 56.63% less than August 2021.”
The report also provides updates on the performance of other layer-1 chains in terms of TVL.
“BSC (Binance Smart Chain) has also decreased by 6.44% month-to-month and by an alarming 75.67% year-over-year. As a result of the wallet attack, Solana TVL dropped by 27% in the first four days of August, continued to decline by 6% for the remainder of the month, and is now valued at $2.11 billion, a loss of about $1 billion.”
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Featured Image: Shutterstock/DrHitch
