With double-digit gains, DeFi-based altcoins outperform Bitcoin (BTC) and Ethereum (ETH). Aave (AAVE) rose 15% to $91. Last week, AAVE announced the stablecoin GHO project, which caused a stir in the community. Uniswap (UNI) also managed to surpass $7, up 13%. In addition, SOL, XLM, MATIC and ALGO also recorded significant increases.
Experts are unsure whether the rally in DeFi altcoins will last for a long time as fundamentals remain weak. Crypto financial services firm Amber Group made the following statement while noting that there was no major acquisition:
"We are currently seeing some increase in DeFi tokens, but basically nothing has changed. The total value locked in is alarming. Institutional investment is not enough."
The total value locked in DeFi protocols has dropped from $95 billion to $38 billion this year. According to data source Defi Pulse, there has been no increase in recent times. The total value locked in represents the amount of user funds invested in DeFi protocols and is one of the most widely used metrics for assessing industry growth.
Other indicators, such as the volume of Bitcoin locked in DeFi and the number of lending and borrowing addresses in DeFi protocols, also pointed to a slowdown. Jesus Rodriguez, CEO of analytics firm IntoTheBlock, stated in a DeFi analytics article published Tuesday:
“The volume of Wrapped Bitcoin participating in DeFi protocols is a clear indicator of interest in DeFi among more traditional crypto investors. Recently, this indicator has dropped to an all-time low, indicating a slowdown in DeFi activity among Bitcoin holders.”
Bitcoin's percentage of circulating supply locked in DeFi fell to a record low of 50.6% on July 8, according to data tracked by IntoTheBlock. Rodriguez underlined that the decline in the number of borrowed and loaned addresses is another indicator of the DeFi winter, this metric has dropped to a 12-month low and also underlined the high transaction costs in Ethereum. Experts see a 49% probability that the Fed will raise rates by 100 basis points on July 27. Federal Reserve Administrator Christopher Waller announced that a 100 basis point rate hike for July would not be appropriate.