Ethereum and Solana lead DeFi surge as TVL and DEX activity soar

The DeFi sec­tor has expe­ri­enced a sig­nif­i­cant increase in both activ­i­ty and token prices, pri­mar­i­ly dri­ven by Bitcoin’s Octo­ber ral­ly. Cen­tral to under­stand­ing this land­scape is the con­cept of Total Val­ue Locked (TVL) and decen­tral­ized exchange (DEX) vol­umes, two crit­i­cal met­rics that offer insights into the health and tra­jec­to­ry of DeFi protocols.

TVL, the aggre­gate val­ue of assets deposit­ed in DeFi pro­to­cols, serves as a barom­e­ter for sec­tor health and investor sen­ti­ment. Cryp­toSlate analy­sis found an inter­est­ing growth pat­tern across var­i­ous chains. Ethereum, the fron­trun­ner with $25.336 bil­lion in TVL, has seen a 31.14% increase over the past month, cement­ing its dom­i­nant posi­tion in the DeFi space. Solana, though low­er in over­all TVL, showed the high­est growth rate at 89.31%. Notably, all chains record­ed pos­i­tive growth over the month, indi­cat­ing a robust expan­sion across the sector.

The num­ber of active users on these chains offers addi­tion­al insights. Despite its low­er TVL, Tron boasts a sig­nif­i­cant­ly larg­er active user base of 1.69 mil­lion, which could result from a more retail-ori­ent­ed user land­scape. Con­verse­ly, Ethereum’s low­er active user count than its TVL might indi­cate a high­er engage­ment of insti­tu­tion­al or sophis­ti­cat­ed, high-net-worth investors.

The mar­ket cap to TVL ratio is anoth­er crit­i­cal met­ric, shed­ding light on the market’s per­cep­tion of a chain’s val­ue. Ethereum’s ratio of 9.72 sug­gests a mature mar­ket. In con­trast, Solana’s high­er ratio of 43.49 indi­cates either poten­tial growth oppor­tu­ni­ties or an under­val­ued ecosys­tem, war­rant­i­ng clos­er investor scrutiny.

Table show­ing the TVL, active users, vol­ume, and mar­ket cap to TVL ratio for the 8 largest L1 chains on Nov. 14, 2023 (Source: DeFi Lla­ma)

DEX vol­umes pro­vide a lens into the trad­ing activ­i­ty with­in these ecosys­tems. Ethereum leads with a 24-hour vol­ume of $1.718 bil­lion, account­ing for a sub­stan­tial por­tion of the total mar­ket. The rapid growth in DEX vol­umes on plat­forms like Solana and Poly­gon, with increas­es of 81.35% and 86.32%, respec­tive­ly, reflects grow­ing user adop­tion and confidence.

The observed trends in TVL, active users, and DEX vol­umes show a mar­ket boom­ing with activ­i­ty. Ethereum con­tin­ues to lead, both in terms of TVL and DEX vol­ume, sig­nal­ing strong investor con­fi­dence and mar­ket dominance.

How­ev­er, the rapid growth of new­er plat­forms like Solana and Poly­gon sug­gests a diver­si­fy­ing land­scape, with dif­fer­ent chains cater­ing to var­ied user needs and invest­ment pro­files. The mar­ket cap to TVL ratios fur­ther con­firms the growth poten­tial of low­er mar­ket cap chains, with Solana and Poly­gon posi­tion­ing them­selves for future growth.