Explosive Growth Expected For Cardano DeFi: A Closer Look At The Numbers

In a recent revelation, stake_pool has forecasted an imminent explosion in the Decentralized Finance (DeFi) sector on the Cardano blockchain. Currently, the total value locked (TVL) in the DeFi ecosystem stands at a significant 600M ADA. It includes approximately 300M ADA and an equivalent amount of tokens available for borrowing, trading, and use as collateral. 

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Defi on #Cardano is going to explode in the coming years.

Right now, the total value locked is 600M ADA which means that roughly 300M ADA + 300M ADA worth of tokens is there to be borrowed, traded & used as a collateral.@ShillMoBaggins @IOHK_Charles @cardano_whale pic.twitter.com/JC9Af6aMV3

— stake_pool (@OuroborosOmega) July 23, 2023

Fueling this growth is the recent surge in DeFi transaction volume, attributed to the “memecoin season” and the advent of “DeFi summer.” Despite ADA’s value being down by 90% from its all-time high. Cardano ranks an impressive #15 TVL in USD among various blockchain networks.

Interestingly, Cardano stands out as the only major chain where the TVL in its native currency has consistently increased during these tumultuous times in the crypto markets.

However, the vast majority of ADA supply is staked to stake pool operators, with approximately 22.6B ADA staked out of a circulating supply of 35B ADA and a maximum supply of 45B ADA. When comparing it to the relatively more minor 300M ADA in DeFi, one can highlight this staggering difference. It constitutes just around 1% of the total staked and circulating ADA.

Cardano (ADA) Halving Looms

Cardano is poised for an ADA halving, similar to Bitcoin, in the upcoming year. Given the current 3% APY for staking (down from 5% in previous years). In addition, it becomes evident that DeFi will play a vital role in enhancing the APY for ADA holders.

Major lending protocols, including Lenfi, are beginning to introduce peer2pool lending. This innovative feature will allow users to supply their ADA while still earning APY on their staked ADA.  Thereby remaining with their stake pool operator. Moreover, they can also benefit from staking rewards from borrowers’ ADA and other pool fees. This unique offering is exclusive to the Cardano blockchain.

Other protocols, such as Liqwid Finance and Indigo Protocol, are also making strides on the Cardano platform, adding to the growing DeFi landscape. As TVL in ADA continues to rise, Cardano could easily secure a spot among the top three chains by TVL.

Reflecting on Cardano’s impressive rise from 2 cents in March 2020 to $3 in September 2021 without the full suite of DeFi tools, smart contracts, DEXes, derivatives, synthetics, and limited NFT marketplaces, it’s evident that the blockchain is now well-equipped for the future.

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