The decentralized finance (DeFi) industry is experiencing massive growth, with the total value of funds locked in DeFi protocols quadrupling in just three months. Despite this, Messari analyst Ryan Watkins points out that the DeFi market is still smaller than XRP and Bitcoin (BCH), two of the leading cryptocurrencies.
In a series of tweets, Watkins cites numbers from Messari showing that the $4.126 billion DeFi market still lags behind the two digital assets. As of July 23rd, the market cap of XRP is $6.615 billion, while BCH is $4.414 billion.
“DeFi’s relative stature becomes even more stark when comparing it to all publicly traded layer 1s outside Bitcoin and Ethereum. DeFi is worth an order of magnitude less than these projects, which are collectively worth $45.7 billion.”
Watkins says many crypto projects eclipse DeFi, although some are useless first-generation cryptocurrencies, unsuccessful Ethereum killers, or vaporware that failed to produce working products after raising significant funds during the 2017 inital coin offering (ICO) boom.
He adds that even the meme token Dogecoin, which has a circulating market cap of $412 million as of July 28th, is still worth more than nearly every DeFi asset, including Compound, Aave, Synthetix, Kyber, and 0x. The only exception is Maker, which has a circulating market cap of $510 million.
So far, the market has yet to credit crypto's capital assets like they have crypto's non-sovereign stores of value.
It's an imperfect analogy, but the relative sizes of capital assets to non-sovereign SoVs in the fiat economy suggests this imbalance may correct over time. pic.twitter.com/qHzhNcmV6J
— Ryan Watkins (@RyanWatkins_) July 28, 2020
DeFi currently makes up just 1.5% of the crypto industry, but Watkins thinks it will keep rising without relying on new money flowing into the market. He says that all it needs is a reallocation of capital.
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