After a great growth between January 2021 and May 2021, the decentralized finance or DeFi market cap has decreased significantly after May. The market size of DeFi remains below USD 48 billion, and a massive drop of 45% happened compared to the figures of May. Decentralized finance provides many advantages in comparison to traditional financial services. Many of the DeFi applications run on the Ethereum blockchain and operate without any central control service. Through decentralized finance lending, people can lend cryptocurrency and earn interest, and the barrier to entry is way lower than a traditional system.
The DeFi market size in June 2020 as measured by the cryptocurrency locked amount stood at $1.85 billion, as per the Defipulse data. Towards the end of 2020, the figures rise to over $16 billion. However, after tremendous growth throughout 2020, the DeFi market propelled in 2021, attaining a value of $46 billion in February. In the next two months, the cryptocurrency locked amount in the market escalated to $64 billion, with an increase of 300% since the start of the year. In May, the market hit an all-time high value and surged to $87 billion on May 12.
But July brought a huge decline, with the market size of decentralized finance dropping by around $40 billion in a month and a half. Such a sharp fall have been caused due to the significant changes in the price of about 100 different cryptocurrencies. This may have resulted in investors pulling out. A second factor for such a fall is the increasing Ethereum transaction fees that are used in DeFi.
Wrapped Bitcoin and Uniswap raised their market cap in 2021
As the leading DeFi token of the world, the Uniswap market cap has risen majorly in 2021. After having a rise to $22.1 billion in May, the market cap of Uniswap has fallen to $9 billion in the last week of June 2021, but still, it has a massive increase of 310% since the year start. Chainlink, the second-largest decentralized finance token, encountered a different trend and its market cap declined by 10% YTD to $7.3 billion.
The Wrapped Bitcoin market capitalization as the third-largest decentralized finance token increased by 50% in this period and has grown from $4 billion in January to $6 billion in the last week of June. The YFI DeFi token surged up to over $38,500 in January in just only six months after being listed. However, after the crypto price crash, the YFI token market cap dropped to $1 billion, making just a 10% increase since the start of the year.