‘Still early’ DeFi sector’s market cap hits $40 billion

DeFi’s market cap hit an all-time high in excess of $40 billion earlier today, with TVL in DeFi protocols touching $30 billion. Despite the $40 billion dollar market cap, however, many argue that it is still relatively early days for the DeFi space. The same was recently highlighted by the DeFi Alliance’s Qiao Wang.

Kinda sad that it’s no longer considered “early” to be in Bitcoin. But happy that it’s still extremely early to be in DeFi. — Qiao Wang (@QwQiao) February 3, 2021

This is an interesting take, especially since many expect the space to become more in-demand in the near future. As highlighted by Sergey Nazarov, the Founder of leading DeFi Oracle Chainlink,

“As more contractual breaches like Robinhood appear, the need for trustworthy contracts that go beyond a brand’s paper promises will be highly in-demand.”

DeFi provides users with trustworthy contracts by combining blockchains, smart contracts, and oracles. In fact, in light of the aforementioned hike in popularity, decentralized exchanges (DEXs) also saw a significant rise in trading volumes. According to data compiled by OKEx Insights, the weekly average trading volume for DEXs rose by 10%, with the same recorded to be $1.97 billion, of which a 37% market share belonged to Uniswap.

Founder of digital asset investment firm Blocktown Capital James Todaro appears to be bullish on DeFi too, with Todaro outlining that the sector has largely flown under the radar of mainstream media, the general public, and institutional investors, despite recording over $30 billion in growth in the span of a year. He added,

“DeFi makes it possible for only you and hardened code to have complete control of your money.”

According to him, one of the best features of this space is its ability to front-run institutional investors and hedge funds. Early investments are restricted to institutions and accredited investors in traditional equity markets and retail investors must wait until an IPO to gain exposure – a time when most gains are already locked in by early investors.

DeFi, however, gives retail investors access from the get-go, which may lead to this sector’s evolution into one of the fastest-growing spaces in the years to come as mainstream adoption becomes a reality.