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In January 2023, there was a substantial increase in DeFi protocols’ total value locked (TVL), with Lido Finance driving the surge. According to DappRadar, the market saw a rise to $74.6 billion in staked assets, a growth of 26% from the previous month.

Optimism Emerges As Top Performing DeFi Platform 

DappRadar’s monthly report highlighted the DeFi sector’s expansion and the revitalized NFT market, which have also witnessed a rise in sales and trading volume. From the report, Optimism was the leading DeFi performer, with a 57.44% increase in TVL, reaching $808 million.

Meanwhile, Sara Gherghelas, a blockchain analyst, argued that the rise in transaction volumes for Optimism likely resulted from a “learn-to-earn” incentives initiative that concluded in mid-January. Gherghelas’ submissions might be correct, as there was a sudden decline in daily transactions on January 17th, when the initiative ended.

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Nevertheless, what happened shows that such an initiative could increase the adoption and onboarding of DeFi.

“By offering valuable learning opportunities, these incentives can deepen users’ understanding of DeFi technologies and their benefits. Thus, driving increased adoption and utilization of DeFi services and products,” Gherghelas added.

On the other hand, Solana experienced a 57% boost in its TVL, reaching $548 million. This was driven mainly by Marinade Finance’s token incentive initiative that rewards SOL depositors with mSOL, a liquid staking derivative.

Furthermore, Solana experienced a $152 million increase in its TVL from December 2022 to January 2023. However, things are not all good for the Solana ecosystem.

One of the projects built on the network Everlend announced its shutdown on February 1st due to a lack of liquidity.

Lido Finance Records Increased Usage

Meanwhile, Lido Finance overtook Maker DAO as the biggest DeFi protocol in January, owing to the increasing interest in liquid staking protocols. Gherghelas noted that Lido’s liquid staking is a major attraction for users seeking to optimize their staking returns.

According to her, Lido’s staking option allows users to access liquid Ethereum staking while bypassing the minimum 32 ETH requirement. Since December, Lido experienced a 36% increase in value staked, totaling over $8 billion.

The blockchain analyst pointed out that the recent surge in cryptocurrency markets has played a significant role in the growth of DeFi’s TVL. The analyst said, “the crypto market has been exhibiting positive trends, which has instilled confidence in investors and resulted in an influx of capital into the decentralized finance sector.”

Similarly, NFTs have seen a resurgence this year, with trading volume hitting $946 million, a 38% month-on-month increase and the highest since last June. Ethereum leads the NFT market, holding 78.5% of its total trading volume, worth $659 million last month. Yuga Labs also had a successful month with a trading volume of $324 million from its unique collections.

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George Ward

By George Ward

George Ward is a crypto journalist and market analyst at Herald Sheets, known for his engaging articles on the latest digital currency trends. With a background in finance and journalism, he presents complex topics accessibly. George holds a degree in Business and Finance from the University of Cambridge.