- Base Chain enters the top ten DeFi protocols.
- TVL across all chains has plunged 78% from 2021 highs.
- Base Chain’s success has bucked wider bearish sentiment.
Decentralized Finance (DeFi) was envisioned as a new money system that would be open, transparent, and accessible to all. This goal has sparked intense competition among blockchains that seek to become the rails for this financial revolution. Among the contenders, Base Chain’s impressive rise in total value locked (TVL) demonstrates it can take on the established players.
Base Chain Rises
TVL refers to the total value of digital assets locked in a specific blockchain and is often used to gauge the blockchain’s health, market interest, and trustworthiness. The coins are deposited across multiple blockchain protocols, including for staking, lending, and liquidity pools.
Data from DeFi Llama shows Base Chain has entered the top 10 DeFi protocols, moving into the eighth spot following a strong run that saw its TVL gain more than 1,500% over the past month. According to the data, Base Chain now ranks above Mixin but below Avalanche, with a TVL of $403.4 million at the time of writing.
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The top three Base Chain protocols are Aerodrome, Beefy, and Overnight Finance, valued at $173.4 million, $32.8 million, and $28.7 million, respectively. Aerodrome, based on Fantom’s Solidly DEX, saw over 33,000% gains alone in the past seven days.
Despite Base Chain’s remarkable rise in TVL, the Coinbase Layer-2 still lags significantly behind established players. DeFi leader Ethereum continues to dominate the sector, holding 57.4% of the total TVL, or $21.4 billion, at writing. Moreover, Ethereum has maintained a consistent stranglehold of the market, maintaining a greater than 50% share since around May 2022.
Although Ethereum continues to dominate the sector, broader metrics reveal that DeFi is a shell of its former exuberance.
DeFi Struggling
TVL across all chains has been in free fall since the November 2021 all-time high, when total valuation peaked at $173 billion.
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Outflows bottomed at $38.6 billion by December 2022, leading to a bounce that topped out at $52.9 billion by April. However, recent price pressure has seen TVL dip below the previous low to $37.7 billion at writing, suggesting current sentiment is more bearish than during the FTX-led crash.
As expected, Ethereum’s TVL mirrors the wider market movement. Yet, Base has bucked the downtrend, indicating that market opportunities still exist for promising upstarts even amid crypto winter.
On the Flipside
- Though intended to measure sustainable value, TVL can be gamed through price manipulation and wash trading, making it an imperfect metric.
- Intensifying regulatory scrutiny around DeFi presents further uncertainty for the sector.
Why This Matters
Base Chain’s rapid rise in valuation demonstrates that a fresh blockchain upstart can still make significant inroads amidst more established DeFi networks.
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