DeFi TVL hits a record $157B as Ethereum competitors attract investors

Interoperability-focused projects that offer cross-chain bridges and lucrative liquidity mining pools are seeing an influx of funds right as DeFi’s TVL hit a new all-time high.

Altcoins and DeFi tokens have been on a tear for the last two weeks  and as the end of August approaches many projects are seeing their tokens reach for new all-time highs.

Data shows that a majority of the top-10 DeFi tokens gained more than 20% in the past 30-days, with projects like Bancor (BNT) and THORChain (RUNE) seeing gains in excess of 115%.

Top-10 DeFi assets by price. Source: Messari

Here’s a look at some of the factors behind the current boost to DeFi tokens and the projects that are leading the way in terms of protocol upgrades and cross-chain interoperability.

Total value locked reaches a new all-time high

Data from DeFi Llama shows that the total value locked (TVL) in all DeFi protocols reached a new all-time high at $157.06 billion on Aug. 22 and many analysts believe TVL is one of the best measures of sentiment within the DeFi ecosystem.

Total value locked in DeFi. Source: DeFi Llama

During the previous run-up, the TVL reaching an all-time high coincided with the surging prices of Bitcoin and Ether (ETH), which both reached their all-time highs around the same time.

This time around, Bitcoin and Ether are more than 24% below their all-time highs yet the total value locked in DeFi has surpassed its previous record.

This suggests that popular DeFi-related tokens with multi-faceted utility within the crypto and DeFi ecosystem have attracted investors' attention. Typically, Uniswap (UNI) and SushiSwap (SUSHI) lead among DeFi tokens but a few other strong gainers this week include a 22% increase for Convex Finance and a 17.84% increase from PancakeSwap.

New protocols attract attention

The past 3 months have also seen the arrival of popular new DeFi protocols like DinoSwap and the rise of Ethereum-network competitors like Avalanche (AVAX) that have brought fresh energy and funds to the DeFi ecosystem.

DinoSwap and Avalanche have benefited from users fleeing high fees on the Ethereum network because both off reduced transaction costs and faster processing times through their cross-chain bridges.

Avalanche launched its ‘Avalanche Rush’ DeFi incentive program on Aug. 18 which has brought a flurry of activity to the protocols involved, including Aave, Curve and SushiSwap. This liquidity mining event has proven quite popular and helped to lift its native AVAX token back above $50 for the first time since February.

In the first half of the year, DeFi tokens rallied early and were followed by a surge in the price of NFTs and NFT-related assets. As summer draws to a close and NFTs notch new eye-watering record sales and volumes each day, it's possible that a sector rotation could occur soon and the DeFi sector may be warming up for a run of its own.