DeFi
DeFi markets surge in 2024 as capital inflows drive growth
2024 saw an influx of capital into decentralized finance (DeFi), driving total value locked (TVL) up 75.1% year-to-date (YTD) to $94.9 billion, up from $54.2 billion at the start of the year, according to a report. report from Binance Research.
This capital increase benefited almost all DeFi sectors, across major and niche markets, making previously inaccessible financial primitives available on-chain.
The yield sector, after increasing 148.6% to $9.1 billion this year, is now the eighth largest DeFi market according to TVL. On-chain interest rate derivatives platform Pendle has seen incredible growth this year, up 1,962% to $4.8 billion.
This increase is due to the popularity of yield-bearing assets and increased rate volatility driven by cash and speculative points redemption schemes.
According to the Binance research team, stablecoins are also on the rise, with circulating market capitalization reaching $161.1 billion this year, the highest in almost two years. Ethena took advantage of a gap in the market to create a more capital-efficient stablecoin, surging 2,730.4% to reach a market cap of $2.4 billion.
Elsewhere, money markets have advanced this year, with on-chain TVL up 47.2% to $32.7 billion. Demand for more flexible loan products, such as those that can incorporate long-term assets as collateral, has fueled interest in modular loans. The report cites Morpho Blue and MetaMorpho, which attracted billions of deposits in just a few months.
Other highlights show prediction markets have printed a new high this cycle, with TVL hitting a record $55.1 million after rising 57.7% year-to-date. Historically thriving thanks to political events and the run-up to the US elections, Polymarket is booming again, with average monthly volumes increasing from $6.1 million in 2023 to $42.0 million in 2024.
The market rebound has inflated on-chain derivatives, the report notes, propelling average daily volumes from $1.8 billion last year to $5.4 billion this year. Hyperliquide capitalized on this trend to increase its market share to 18.9%, making it the second largest trading volume, behind dYdX.
“2024 marked a turning point for DeFi, with significant capital commitments highlighting the robustness of the sector,” said analysts at Binance Research. “The distribution of this capital across almost all DeFi sub-sectors highlights market diversification, moving beyond simple decentralized exchanges (DEXs) as primary drivers.”
Despite this influx of on-chain liquidity, the sector’s public market valuations have yet to catch up with those of the broader crypto market. However, the steady flow of billions into DeFi shows its promise to meet ambitious revenue forecasts, such as the projection of $231.2 billion by 2030, the study concludes.