DeFi Still In The Early Stages With A Lot Of Potential But Faces Regulatory Hurdles: JPMorgan

According to JPMorgan Chase strategists, the expansion in decentralized finance (DeFi) space is less explosive than at first glance.

Overall, the market value of DeFi is currently around $169.6 billion, compared with just $22 billion at the start of 2021. The space has also amassed nearly $270 billion in assets, up from $21 bln at the beginning of this year. Both market cap and total value looked (TVL) are around their all-time highs.

In a study from the JPMorgan team led by Nikolaos Panigirtzoglou, the DeFi recorded a growth of 780% in dollar terms this year on the Ethereum blockchain. This, according to strategists, is just reflecting the Ether price rally, which surged 533% YTD.

When it comes to the amount of ETH locked up in DeFi, the growth has been slower but still showed a robust 50% increase in 2021, they said.

According to DeFi Llama, at the beginning of this year, nearly 28.5 million ETH were locked in DeFi, which topped at 47.8 million ETH in July and is currently standing at 38.5 million ETH.

As we have been reporting, the Ethereum network is also losing its share of the DeFi activity. Currently, Ethereum’s share sits at about 70% versus a near-total lock at the start of the year, the team said. The 50% estimated expansion adjusts for this shift, it added.

As for other native tokens, there are currently 61.65 million SOL, 2.91 billion MATIC, 2.08 billion FTM, 120.2 million AVAX, 221.63 million LUNA, and 33.9 million BNB locked in their respective ecosystems.

But while Ether is the 2nd largest cryptocurrency trading at $4,630, at 3rd place, BNB is trading at $633, SOL at $233 (5th place), MATIC at $1.71, FTM at $2.61, AVAX at $87, and LUNA at $49.

“There is little doubt that DeFi is still at early stages and thus has a lot of potential to grow over time.”

“But until it becomes mainstream it faces several hurdles, especially regulatory.”