According to a new study, DeFi (decentralized finance) has demonstrated to be more scalable than traditional finance, despite certain market conditions from 2022.
Despite the total value locked dropping from USD 180 billion in December 2021 to a bit over USD 50 billion by the end of October 2022, there are several DeFi market sectors that still display an optimistic trend.
End-to-end digital asset financial services company Hashkey Capital released a report for the end of the year, focused on DeFi’s potential, which proves to be a lot more scalable than traditional finance. Despite the potential for scale, DeFi protocols prove to be more resilient and can evade black swan events without harm (e.g. following the collapse of UST).
The DeFi Ecosystem Landscape Report considers that the decline in total assets under management value from 2022 was largely based on unfavorable market conditions. The Total Value Locked (TVL), data from the report shows, peaked at USD 180 billion last December, dropped to almost USD 150 billion in May 2022, and reached a bottom of over USD 50 billion in October 2022. The report still showcased some sectors as having optimistic trends, despite TVL’s decline.
Hashkey Capital’s study shows that VC (venture capital) companies backed DeFi protocols by investing USD 14 billion in 750 DeFi projects related to crypto, during 2022’s first half.