3 metrics that DeFi traders should monitor to stay ahead of the bull market

Decentralized finance (DeFi) is one of the most exciting and volatile sectors in the cryptocurrency market outside of Bitcoin.

In 2020, the DeFi sector experienced a surge of growth, seeing Total Value Locked in decentralized finance protocols reach $100 billion (up from $1 billion). However, the joy did not last long. In 2021, the DeFi market began to adjust, TVL decreased from 100 billion USD to 40 billion USD.

But despite the volatility of the DeFi market, there are still ways for traders to take advantage as the crypto sector begins to recover. Three of the most important metrics to XEM are TVL, platform fee revenue, and number of non-zero wallets holding Token.

Let's dig deeper into these metrics with VIC to assess the state of the DeFi sector!

Total Value Locked

TVL is one of the most widely used metrics to measure the overall health of the DeFi ecosystem. TVL represents the total amount of Cryptoasset locked in DeFi protocols.

When TVL increases, it shows increasing demand and usage of DeFi services, which could signal a bull market.

Although the current TVL is slightly lower than the 2023 peak set on April 15 of $52.9 billion, the index has increased continuously YTD, increasing by $7 billion. , exceeding the threshold of 45 billion USD.

TVL of the cryptocurrency market. Source: defillama

Transaction fee revenue

Protocol fees measure the amount of money that blockchains receive for completing transactions. Layer1 blockchains are an important part of the DeFi ecosystem, as they enable the building of Decentralized Applications, in which users can interact without the need for intermediaries.

As layer1 fees increase, it shows that interest in DeFi is growing and traders are using DApps to interact with blockchains.

Over the past 30 days, the top 16 layer1 blockchains by market Capital all showed positive fee increases, with a total revenue of up to $2.2 billion.

Transaction fees of layers1. Source: TokenTerminal

DeFi wallet address

The number of DeFi wallet addresses with non-zero balances is an important indicator of the number of investors actively participating in cryptocurrency.

As the number of addresses with non-zero balances increases, it shows that demand for DeFi is growing. This could be a sign of a bull market.

That being said, DeFi wallet addresses with non-zero balances are a reliable indicator of market demand as users are only likely to hold a cryptocurrency Token if they believe that the Token will increase in value or accumulate. extreme protocol usage.

Separating statistics from the entire crypto market to focus on DeFi Token , the number of non-zero addresses reached an All-Time-High on November 8 with 1.1 million addresses. When XEM at November 8, 2020, there were only 267,180 wallet addresses with a non-zero balance.

DeFi Blue-Chip Token price fluctuations. Source: Glassnode

In short, the DeFi market has recovered and grown since the Terra Luna “disaster” in May 2022. However, the current DeFi field is still not really stable. Therefore, careful XEM of onchain metrics and other macro factors is extremely important to be able to identify a bull market.

Additionally, by tracking these metrics, traders/investors can better understand the overall state of the DeFi market and can receive early signals of the emergence of a new bull market. .

VIC Crypto compiled

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