Key Metrics for DeFi Traders to Identify the Next Cryptocurrency Bull Market

Key Metrics for DeFi Traders to Identify the Next Cryptocurrency Bull Market

The Ever-Evolving DeFi Sector

The decentralized finance (DeFi) market has been a rapidly changing sector in the cryptocurrency space, outside of Bitcoin. The surge from a $1 Billion to over $100 Billion in total value locked (TVL) in decentralized finance protocols in 2020 underlines the sector’s exciting and volatile nature. Nonetheless, the DeFi market has likewise experienced whole lot of corrections, with the TVL dropping from $100 Billion to $40 Billion in 2021.

Important Metrics to Watch in the DeFi Market

Regardless of the market’s volatility, there are 3 key metrics you should look out for to catch onto sustained positive trend momentum: total value locked (TVL), platform fee revenue, and the number of non-zero wallets holding tokens.

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Increases in the Total Value Locked

TVL is a vital metric to gauge the overall health of the DeFi ecological system, representing the total amount of digital currency assets locked in DeFi protocols. An increase in TVL signifies growing demand and use of DeFi services, indicating a probable bull market. Regardless of a slight dip from the peak, TVL has been  growing since the start of the year, reaching over $45 billion.

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Increased Fee Revenue Points to Increased Usage and Interest

Protocol fees measure the fee revenue received by blockchains for completing transactions, reflecting increasing interest and usage in DeFi. In the past 30 days, the top 16 layer-1 blockchains by market cap have shown a positive increase in fees, with Ether (ETH) collecting over $2.2 Billion when annualized.

Non-zero DeFi Wallet Addresses Rise

The number of non-zero addresses is a reliable indicator of increasing demand, signaling a probable bull market. The number of non-zero DeFi wallet addresses hit an record-breaking peak of 1.1 Million, emphasizing the growing participation in DeFi.

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Hot Take: Insights into the DeFi Market

The DeFi market has seen ups and downs, from a major correction to a renewed surge in key metrics. By carefully monitoring these metrics, you can gain a better understanding of the DeFi market’s health and potentially identify the emergence of a new bull market.

Author – Contributor at | Website

Coinan Porter stands as a notable crypto analyst, accomplished researcher, and adept editor, carving a significant niche in the realm of cryptocurrency. As a skilled crypto analyst and researcher, Coinan’s insights delve deep into the intricacies of digital assets, resonating with a wide audience. His analytical prowess is complemented by his editorial finesse, allowing him to transform complex crypto information into digestible formats.

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