Total Value Locked (TVL)
TVL is one of the most widely used metrics to measure the overall health of the DeFi ecosystem. TVL represents the total amount of cryptocurrency assets locked within DeFi protocols. When TVL increases, it indicates growing demand and usage of DeFi services, which can signal a bullish market.
Although the current TVL is slightly below the peak of $52.9 billion set on April 15, 2023, it has been steadily increasing since the beginning of the year, adding an additional $7 billion, surpassing the $45 billion mark.
Transaction Fee Revenue
Transaction fees are the fees collected by blockchain protocols when transactions are executed. Layer1 blockchains are a crucial part of the DeFi ecosystem as they enable the development of decentralized applications (DApps), where users can interact without intermediaries. When layer1 fees increase, it indicates rising interest in DeFi and traders using DApps to interact with blockchains.
In the past 30 days, the top 16 layer1 blockchains by market capitalization have shown a positive increase in transaction fees, with total revenue reaching $2.2 billion.
DeFi Wallet Addresses
The number of DeFi wallet addresses with non-zero balances is an important indicator of the active participation of investors in cryptocurrencies. When the number of addresses with non-zero balances increases, it indicates a growing demand for DeFi, which can be a sign of a bullish market.
DeFi wallet addresses with non-zero balances are a reliable indicator of market demand because users can only hold cryptocurrency tokens if they believe the tokens will appreciate in value or actively use the protocol.
By isolating statistics from the entire cryptocurrency market and focusing on DeFi tokens, the number of addresses with non-zero balances reached an all-time high on November 8, with 1.1 million addresses. Comparing this to November 8, 2020, when there were only 267,180 addresses with non-zero balances.
In summary, the DeFi market has recovered and grown since the “Terra Luna crisis” in May 2022. However, the current DeFi landscape is still not entirely stable. Therefore, carefully considering on-chain data and other macroeconomic factors is crucial to determine market trends.
Additionally, by monitoring these metrics, traders/investors can gain a better understanding of the overall DeFi market status and receive early signals of the emergence of a new bull market.