These key metrics are driving Defy to 2022 highs.

The decentralized finance (DeFi) sector is experiencing a renaissance with key metrics such as active loans and total value locked (TVL) rising from their 2023 lows.

DeFi lending, which allows investors to lend their crypto holdings in exchange for interest, is an important indicator of DeFi participation and overall market health.

Active Loans TVL grew 160% to $13.3 billion.

In a recent post on X, the crypto market analysis platform Token Terminal showed a significant increase in active loans in the DeFi sector, which has now reached approximately 13.3 billion dollars, indicating the levels last seen in early 2022. An increase in capacity in the sector, a trend often associated with the start of a bull market.

When DeFi wakes up again ✍️ pic.twitter.com/xrkQqCxGHE

— Token Terminal (@tokenterminal) July 31, 2024

In the year During the crypto bull market of 2021, active loans in DeFi rose to $22.2 billion, reflecting the highs reached by Bitcoin and Ethereum, which reached $69,000 and $4,800 respectively. However, this number dropped to $10 billion in March 2022, and finally to $3.1 billion in January 2023.

Total Value Locked (TVL) in Diffie decreased last year, It has declined 80% from a peak of $180 billion in November 2021 to about $37 billion in October 2023. TVL will increase by around 160% to about $96.5 billion. Specifically, DeFi TVL doubled in the first half of 2024, reaching a peak of $109 billion in June.

The current leading liquid staking protocol by locked-in price is Lido, with a TVL of $38.7 billion. Stock ecosystem EigenLayer and Aave, which each hold more than $11 billion in locked assets, closely follow the protocol.

Professional insights

Humble Farmer Academy founder Taiki Meda predicted that we could be entering a “DeFi renaissance” after more than four years of underperformance.

Many “DeFi OGs” have mentioned that “high float, low fully diluted value (FDV)” coins are currently in the category of strong incentives on the horizon.

I believe we are approaching a DeFi renaissance after 4+ years of abysmal underperformance.

Many of these DeFi OGs are now in the category of “high float, low FDV” coins with strong incentives down the road.

Here's why I believe $AAVE @aave is ready to lead pic.twitter.com/gaTZpKOfdg

— Taiki Maeda (@TaikiMaeda2) July 29, 2024

Maeda cites DeFi lending platform Aave as an example, which he believes is “poised to take off” due to the increasing supply of its native stablecoin GHO and Aave's DAO initiative to reduce costs and introduce new revenue streams.

Meanwhile, despite recent positive trends, CoinGecko data shows that DeFi assets' market capitalization share is only 3.4%. Native tokens for popular DeFi platforms such as Aave, Curve Finance (CRV) and Uniswap are also still down more than 80% from their all-time highs.