DeFi Enjoys a Prolific Start to 2023: Finance Redefined

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you significant developments over the last week.

2023 started on a bullish note for the entire crypto market, including the DeFi ecosystem, with most of the tokens posting double-digit gains in January and recording multi-month highs.

Aside from the bull rally, January also saw a 93% year-on-year decline in losses from DeFi exploits and hacks.

The slew of regulatory action against the Mango Markets exploiter is being hailed as a big win for the DeFi sector. The United States Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have taken action against the alleged fraudster, which shows that DeFi is becoming a “safer and more welcoming environment,” according to credit rating firm Moody’s.

Amid all the positive developments, Solana DeFi protocol Everlend shut down over liquidity issues stemming from the FTX crisis and told users to withdraw funds.

North Korean hackers also tried laundering $27 million in Ether (ETH) from the Harmony bridge attack.

The bullish momentum of the top 100 DeFi tokens continued into February as the total value locked (TVL) in DeFi protocols reached nearly $50 billion, with most tokens registering another weekly price surge.

DeFi protocols experienced a boom in TVL across different staking pools in January.

The market hit $74.6 billion worth of staked assets, increasing by 26% from December.

In its latest monthly report, DappRadar outlined the growth of the DeFi sector alongside rejuvenated nonfungible token (NFT) markets, which have also had upticks in trading volume and sales.

Aside from the bullish crypto market rally in January, there’s been more positive industry news as the month saw a steep decline in losses from exploits compared to January 2022.

According to data from blockchain security firm, PeckShield, as of Jan. 31, there were $8.8 million in losses from crypto exploits.

There were 24 exploits over the month, with $2.6 million worth of crypto sent to mixers such as Tornado Cash. The breakdown of assets sent to mixers includes 1,200 ETH and approximately 2,668 BNB.

Recent charges brought against Mango Markets exploiter Avraham Eisenberg will positively impact the DeFi space, according to credit rating firm Moody’s.

In a Jan. 31 note from Moody’s Investor Service, the assistant vice president of decentralized finance, Cristiano Ventricelli, stated that enforcement actions brought by the two leading U.S. market regulators in January mean that DeFi is moving toward a “safer and more welcoming environment.”

Solana DeFi protocol Everlend is closing down its operations and urging clients to withdraw funds from the platform.

The company announced the decision on Twitter on Feb. 1, saying that despite having “enough runway” to continue operating, it would be a gamble under current market conditions.

North Korean exploiters behind the Harmony bridge attack continue to try and launder the funds stolen in June 2022. According to on-chain data revealed on Jan. 28 by blockchain sleuth, ZachXBT, the perpetrators moved 17,278 ETH over the weekend, worth about $27 million.

The tokens were transferred to six crypto exchanges, ZachXBT wrote in a Twitter thread, without disclosing which platforms had received the tokens.

Three primary addresses carried out the transactions.

Analytical data reveals that DeFi’s total market value remained over $40 billion this past week, trading at about $48.1 billion at the time of writing.

Data from Cointelegraph Markets Pro and TradingView show that DeFi’s top 100 tokens by market capitalization had a bullish week, with nearly all the tokens registering price gains.

dYdX (DYDX) was the biggest gainer again, with a 39% surge on the weekly charts, followed by Fantom (FTM), which continued last week’s bullish momentum and registered a 33% weekly surge.

Thanks for reading our summary of this week’s most impactful DeFi developments.

Join us next Friday for more stories, insights and education in this dynamically advancing space.