Three reasons why the DeFi crypto bull run is just getting started

Published on by Cryptoslate | Published on

The DeFi sector has been seeing tremendous growth in recent weeks.

There are a few key reasons why this fragment of the crypto market has yet to reach its full growth potential, and even some data suggesting the sector remains undervalued compared to its utilization rates.

One venture capitalist spoke about a few of these factors in a recent post, concluding that the DeFi bull run is just getting started.

1: Compound continues seeing growth on multiple fronts.

The total-value locked within this platform has been seeing significant growth as of late, and the number of assets supplied on Compound has risen by 14x since the COMP governance token was first launched in June.

A portion of this growth can be seen while looking towards the supply of DAI on the platform, which has exploded from $48m just five weeks ago to its current levels of $1.1b. This data illustrates that the demand for protocols like Compound is more than just a fad.#2: Balancer Labs also sees rapid growth.

Compound isn't the only protocol that is seeing tremendous growth.

3: DeFi tokens still only account for a small portion of the crypto market.

The growth seen on platforms like Compound and Balancer demonstrates that the recent bull run seen by many DeFi crypto tokens is rooted in more than speculation and hype.

According to CryptoSlate's proprietary data, the aggregated market cap of the top 65 DeFi tokens relating to decentralized finance currently sits around $8.64b. If the oracle network Chainlink is removed from this calculation, the number drops down towards $5.2b. To put this into perspective, Bitcoin Cash - which is considered by many to be a "Ghost chain" due to its incredibly low transaction volume - has a market capitalization of $5.6b. The relatively small size of this market fragment, coupled with growing utility, suggests there is still room for major upside for many of these crypto tokens.