Despite the current hype, the Decentralized Finance (DeFi) sector is still small compared to the entire cryptocurrency market, the latest report from Messari reveals.
According to Messari analytics, the recently exploding DeFi sector is worth around 1.5% of the whole cryptocurrency market. The sector, which increased in billions within every few months is currently worth $4.1 billion in total collective capitalization. However, the entire digital asset market capitalization is $283.6 billion.
As announced by the researcher at Messari, Ryan Watkins, the share of DeFi total cap is even smaller compared to Ripple (XRP) and Bitcoin Cash (BCH) alone, which is $6.615 billion and $4.414 billion respectively.
The DeFi sector received a significant rerating over the past few months. It has been rising since the Black Thursday global market crash this March, however, the Compound’s liquidity mining program was the DeFi market darling and the trigger for the bulls to run rampant. Despite the fact, the decentralized finance sector is still small in a bigger perspective, Messari reports.
Compared to combined market capitalization of all publicly traded first-generation cryptocurrencies with Bitcoin and Ethereum excluded, DeFi’s total capitalization is nearly ten times smaller.
Furthermore, Watkins stated that the Top-30 of digital assets outside Bitcoin and Ethereum is full of useless first-generation cryptocurrencies and dead projects.The first-generation cryptos, like Litecoin (LTC) or Dogecoin (DOGE) are made up of Bitcoin and all the coins that forked its source code and basic concepts.
The top 30 cryptoassets outside BTC and ETH is full of useless first-gen cryptocurrencies, ghost town “ETH killers”, and dead projects.— Ryan Watkins (@RyanWatkins_) July 28, 2020
This doesn’t even include the vaporware yet to launch projects that raised large sums of money at ridiculous valuations in 2017. pic.twitter.com/xjyF3cPUQK
Reportedly, the famous meme-coin Dogecoin has a market worth of $412 million, which is higher compared to the leading DeFi project tokens like Compound ($340 million), Aave ($340 million).
However, the decentralized lending platform Maker alone stands higher above Dogecoin with $510 market capitalization. MakerDAO also became the first-ever DeFi protocol this week, which surpassed the milestone of $1 billion in total value locked.
Despite the fact that DeFi takes a small share in crypto space compared to the whole crypto market capitalization, Messari’s researcher claims that it still has significant room to grow and benefit from the reallocation of capital with Top-30 cryptocurrencies. According to him:
DeFi doesn’t need new money flowing into crypto to continue its rise. All it needs is a reallocation of capital.
The Decentralized Finance sector is living its golden age for the last quarter. The total value locked surged to over $4.1 billion within a few months. Trading volumes on decentralized exchanges (DEX) hit the new records last month with more than a quadruple growth compared with the previous year. Meanwhile, the lending markets exploded with liquidity mining protocols like Compound and Maker.