Decentralized finance (DeFi) on the Cardano blockchain has seen a notable uptick in 2022, with total value locked (TVL) across DeFi protocols surging past $160 million in recent weeks. This growth signals increasing adoption and usage of Cardano for DeFi services, boosting its status as a DeFi chain and potentially increasing value prospects for its native ADA token.
Cardano’s DeFi TVL has jumped over 9% in the past week alone according to data from DefiLlama, reaching an all-time high above $161 million as of October 5. The 1-week gain comes amid a longer uptrend, with Cardano DeFi TVL having risen nearly 2% and 1% over the past 24 hours and past month, respectively.
The growth stands out at a time when most blockchain protocols have struggled with capital outflows and slumping TVL amid the 2022 bear market. Cardano’s ability to buck the trend highlights its strengths as an emerging DeFi hub.
Top Protocols Drive Cardano DeFi Growth
Cardano’s total value locked is made up of the cumulative value of all tokens deposited into its various DeFi protocols for activities like lending, liquidity provision, and more. Much of the recent growth has been driven by its top DeFi applications.
For instance, decentralized exchange (DEX) Minswap currently leads with over $42 million in TVL. However, lending protocol Indigo has been surging lately, jumping almost 13% in the past week and 17% in the past month. Indigo could soon rival Minswap as the top DeFi app on Cardano.
Other major protocols like lending platform Liqwid and algorithmic stablecoin Djed have maintained solid TVL levels between $11 million to $19 million. Meanwhile, Optim Finance has seen the strongest growth recently, with TVL spiking nearly 20% and 22% over the past week and month respectively amid strong interest in its lending/borrowing services.
The ability of Cardano’s DeFi ecosystem to attract capital during the bear market highlights its real-world utility and advantages for investors, lending confidence to its long-term viability.
More DeFi Activity Could Support Higher Value for ADA
With total value locked across its DeFi landscape rising, Cardano appears positioned for further growth as a blockchain supporting decentralized apps. More real-world use should translate to greater utility and demand for its native ADA token as well.
In fact, Cardano’s $161 million DeFi TVL already represents nearly 2% of ADA’s total $9.2 billion market capitalization — a substantial ratio highlighting the real economic activity conducted on the network.
As DeFi expands on Cardano, more users will need ADA tokens to pay fees and participate in protocols. And increasing utility will provide fundamental support for higher ADA prices over the long-run.
By delivering a real working DeFi ecosystem that attracts capital even amid the bear market, Cardano continues to establish itself as a leader in the space. And its ability to achieve substantial DeFi adoption should ultimately benefit ADA holders.
Cardano Outpaces Rivals With Development Activity Too
Beyond its DeFi growth, Cardano has showcased technical development that outpaces competitors like Ethereum. Data platform Santiment found Cardano vastly exceeded all other projects for developer activity in September 2022.
Its robust development activity highlights that builders are continuing to create real technology and solutions on Cardano despite market conditions. With both users and developers engaged, Cardano is primed to capitalize when sentiment eventually turns bullish again.
In the nearer-term, staking also offers investors incentives to buy and hold ADA. Over 71% of ADA’s supply is currently staked, offering passive income potential to those participating in consensus while supporting network security.
Overall, with surging DeFi adoption, leading development activity, and compelling staking rewards, the long-term investment case for ADA looks increasingly strong. The recent DeFi growth offers tangible evidence of real utility that could translate to token upside when the next crypto bull run arrives.
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