Cardano DeFi TVL Rises More Than 100% In One Month

DeFi protocols in Cardano, a proof-of-stake smart contracting platform, have locked over $100 million in user assets as of February 7. 

According to DeFiLlama statistics, Cardano DeFi protocols command a total value locked (TVL) of slightly over $103 million, which is more than 2X the amount on January 1. Early this year, Cardano TVL stood at $48.95 million.

The upswing of TVL could be because of several factors. However, top of the list is the broader recovery in the crypto markets. The rising tide of Bitcoin, which rose from below $15,000 to over $24,000 in early February, supported ADA’s rise, Cardano’s native currency. 

Cardano’s DeFi TVL is expanding faster than the overall market. To illustrate, from January 1 to February 7, the total DeFi TVL across all chains rose from around $38 billion to $48 billion, an increment of approximately 20%. During this time, Cardano DeFi TVL rose by over 100%.

ADA Prices Are Recovering, Developers Are Building

The fact is there could be several factors behind the revival of DeFi activities in Cardano. After a biting crypto winter which saw ADA drop by more than 70% from 2021 highs, markets appear to be recovering. This may be boosting users’ confidence to engage in DeFi, including in protocols launched on Cardano.

The proof-of-stake smart contracting platform has also been implementing changes and adding features to enhance scalability. 

Under Basho, the goal of Cardano developers is to boost performance and scalability. Cardano is based on Bitcoin’s code but with smart contracting capability, which was activated via Alonzo, marking the end of Goguen. 

Cardano uses an unspent transaction output (UTXO) model, diverging from account-based systems like Ethereum, where the validator can prioritize transactions by tagging higher fees. Therefore, users in Cardano know beforehand the fees they pay. All transactions are queued via an off-chain sequencer and confirmed on-chain.

The Launch of Djed, An Overcollateralized Stablecoin 

MinSwap, a decentralized exchange, dominates with a 32% market share, managing $34.07 million in user assets. Djed, an overcollateralized stablecoin developed by Input-Output Global (IOG) and COTI, has a TVL of $11 million. 

The stablecoin was launched in early February 2023 after a year in development, and the developer said it is overcollateralized by between 400% and 800% by ADA.

IOG said the stablecoin would offer an alternative to volatile crypto assets currently being used in the smart contracting platform. MinSwap, MuesliSwap, and WingRiders are some of the DeFi protocols that have supported Djed. However, Djed could be integrated into over 40 projects in the Ethereum competitor in the coming months.

As of the time of writing on February 7, ADA is changing hands at $0.38, down 3% in the past trading week but up roughly 68% from December lows.

Feature image from Flickr, Chart from TradingView