Decentralized finance has recently resumed its growth as the cryptocurrency market has rallied in recent weeks, with total value locked (TVL) reaching an all-time high of $267 billion.
According to a recent report, Bitcoin demand slowed in the third quarter due to a lack of profit opportunities for traders.
DeFi is growing as Bitcoin lags behind
According to DeFillama, the TVL in DeFi surpassed $260 billion following the tremendous Bitcoin rally in October. Protocols that support the DeFi ecosystem, such as Ethereum, Solana, and Avalanche, have also seen significant price increases. Solana recently hit a new high of $260.
Daily transactions on DeFi protocols, such as PancakeSwap, which runs on the Binance Smart Chain, have also increased. The network's active users increased to over 600,000, with the number of active addresses on the protocol reaching 2 million.
According to Genesis' Q3 report, the number of institutions entering the DeFi industry is increasing. Large corporations are increasingly interested in using Ether to borrow and lend in a variety of decentralized applications (Dapps).
This could also be attributed to a "significant structural change" in the cryptocurrency market as retail exchanges began to deleverage. Several digital asset exchanges limited their leverage offerings in the second quarter of 2021, including Binance, which reduced its levels to a maximum of 20x for accounts opened for less than a month.
Genesis also stated that the weighting of Bitcoin in its overall portfolio has decreased due to a lack of BTC-denominated trading opportunities. While interest in the leading cryptocurrency has waned, emerging Layer-1 protocols such as Solana have seen an increase in demand, serving as natural liquidity pairs for DeFi yield opportunities.