The total Bitcoin and Ethereum held in DeFi protocols has surpassed the $14 billion mark
The total value locked in DeFi reached new heights thanks to a boost by surging crypto prices. The total value locked (TVL) almost broke $14 billion on 14 November, but a sharp fall saw it drop to $13.47 billion two days later. A week later, on 21 November, TVL reached $14 billion before setting a high of $14.39 billion the following day.
This figure has since slightly decreased to its current $14.3 billion levels. The rise in total value locked has been driven by the rising price of Bitcoin and Ethereum over the past few days. Ethereum has seen the biggest jump in its price, going up by 54% since the month’s start. In the same period, Bitcoin has recorded a 34% price upswing.
However, there’s a fly in the ointment that shadows the growth in TVL. The number of Ethereum held in DeFi protocols has been dipping and is currently 25% lower than it was last month. DeFi Pulse estimates that over two million ETH have exited the DeFi sector. However, the number of Bitcoin in the DeFi ecosystem has remained about the same, moving from 164,500 on 20 October to the current 168,500.
The ETH outflow is most likely a result of investors moving to support the upcoming launch of the Ethereum 2.0 network. These investors may have taken out their deposits from DeFi to activate Ethereum’s most ambitious upgrade yet, hence the slump.
Ethereum 2.0, scheduled to launch on 1 December, required about 525,000 ETH to be sent to a deposit contract address. This target was reached yesterday after more than 150,000 ETH were injected in 24 hours.
There is also a possibility that DeFi users feel the need to be more careful with their crypto assets as many hacks are being reported. In November alone, DeFi projects Value DeFi and Akropolis have been exploited by hackers. Pickle Finance was also hacked, losing millions to the incident. Late in October, Harvest Finance suffered a loss of over $34 million in another incident. Fearful of these hacks, DeFi users may have decided to pull out some of their assets.