In January 2023, decentralized finance (DeFi) protocols experienced a boom in the total value locked in different staking pools. The market reached USD 74.6 billion in blocked assets, which represents an increase of 26% compared to December.
In its latest monthly report, DappRadar highlights the growth of the DeFi sector along with the rejuvenated non-fungible token (NFT) markets, which have also posted upticks in trading volume and sales.
Optimism emerges as the top-performing DeFi, seeing a $57.44 rise in total value locked (TVL) to $808 million. Blockchain analyst Sara Gherghelas told Cointelegraph that Optimism’s transaction volumes were likely boosted by a “learn to earn” incentive program that ended in mid-January.
A sudden drop in daily transactions on Jan. 17 suggests that educational incentive programs could play a role in driving DeFi adoption and uptake, as Gherghelas explained:
“By providing a hands-on learning experience, these incentives can help users gain a deeper understanding of DeFi technologies and the potential benefits they offer, thus driving further adoption and use of DeFi products and services.”
Solana saw its TVL increase 57% to $548 million, driven by Marinade Finance’s introduction of a token incentive plan that rewards SOL depositors with the liquid staking derivative mSOL. The protocol reached USD 152 million TVL between December 2022 and January 2023.
Not everything is positive for the Solana ecosystem, with the Everlend platform announcing its shutdown on February 1, citing a lack of liquidity to shut down its service.
The upcoming Ethereum update in Shanghai is also boosting DeFi staking due to the expected opening of Ethereum staking contract withdrawals. Lido Finance displaced Maker DAO as the largest DeFi protocol in January, fueled by the popularity of liquid staking derivative protocols.
According to Gherghelas, Lido’s liquid staking solutions have proven to be a big draw for users looking to maximize staking returns.
“What sets Lido apart from other DeFi protocols is its innovative staking solution, which allows users to access liquid Ether staking without committing to the traditional minimum of 32 ETH.”
Lido saw more than $8 billion worth of stakes on its platform, an increase of more than 36% since December 2022. Gherghelas highlighted the recent rally in cryptocurrency markets contributing to the increase in DeFi TVL:
“The crypto market has been bullish, leading to increased investor confidence and an inflow of capital into the DeFi space.”
NFTs have also started the year strong. Trading volume reached USD 946 million, an increase of 38% month-on-month and the highest trading volume recorded since June 2022.
Ethereum continues to dominate the NFT market, accounting for 78.5% of total trading volume worth $659 million in January. Yuga Labs enjoyed a good month, with $324 million in trading volume from its exclusive collections.
The NFT DeGods and Monkey Kingdom collections helped drive a 23% increase in Solana’s NFT trading volume. For its part, Polygon experienced a significant 124% increase in its NFT trading volume and a total of 4.5 million NFT sales, driven in part by Collect Donald Trump cards.
As Cointelegraph explored in late 2022, unique active wallet (UAW) data comparing 2022 to 2021 showed a 50% increase, with DeFi, NFTs, and blockchain gaming driven by activity and trading volumes.
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