The decentralized finance (DeFi) sector has faced a challenging year, as the total value of assets locked (TVL) in DeFi projects recorded a 30% year-on-year decline, dropping to its lowest point for 2023 at $36.95 billion, according to data from DeFillama.
The once-thriving DeFi industry began the year strongly, peaking at over $52 billion in April, but it has seen a consistent six-month underperformance that has led to its current low.
Liquid Staking Projects Buck the Trend
Despite the overall decline, liquid staking projects have emerged as a beacon of resilience within the ever-evolving DeFi landscape.
Unlike other DeFi categories, liquid staking projects have thrived, returning almost 300% from their 2022 low to nearly $20 billion in TVL, as reported by DeFillama. The most recent data reveals that TVL now stands at $17.67 billion.
Within the liquid staking niche, Lido stands as the dominant player, maintaining over 50% of the market share. It has outpaced major contenders like Binance, Coinbase, and Kraken, according to insights from Nansen data shared with CryptoSlate.
Tron-Based Projects on the Rise
The Tron network has also witnessed significant growth in its DeFi projects, contributing to an all-time high TVL of 18.23%. This increase is a substantial jump from the 6.5% recorded earlier in the year. On-chain sleuth Patrick Scott attributes Tron’s increased TVL to the growth of the first Real-World Assets (RWA) on the network, particularly stUSDT.
DeFillama data shows that the project’s TVL is nearing $2 billion, achieved in just four months since its launch.
Challenges for the DeFi Sector
Despite pockets of growth, the DeFi sector has faced its share of challenges, including a decrease of approximately 2.5 million active monthly users throughout the year, as reported by Altindex. The decline in users began in May and has maintained a downward trend.
In May, the DeFi sector boasted over 3.8 million monthly users, but by October, this figure had dwindled to around 1.15 million, compared to the 2.7 million users reported in the previous October. In total, monthly unique users have dropped by 66% from the all-time high of 7.51 million recorded in November 2021.
While DeFi projects have faced headwinds, the resilience of liquid staking projects and growth in specific blockchain networks show that the DeFi landscape remains dynamic and full of opportunities.