Tried and True DeFi Protocols Widen the Gap with Laggards in July Rally

DeFi veterans are suddenly having a good summer.

Data from The Defiant Terminal show that seasoned decentralized exchanges and lending protocols are widening the gap with their less robust rivals during the July rally. Top performers include MakerDAO, Aave, Curve, and Uniswap.

But first, Ethereum: The price of Ether is up 45% since bottoming out on July 13, driven by anticipation for The Merge, while top DeFi assets are up by around one third over the same period. The move comes after a brutal second quarter for DeFi and crypto, with two-thirds of DeFi’s total value locked (TVL) evaporating since early April.

The TVL in Ethereum’s top DEXes Uniswap and Curve have also rebounded eight days, with both protocols growing by $500M since July 13 to around $5.5B each, according to The Defiant Terminal.

By contrast, Balancer and Sushi have added $100M, while Bancor is up just $8M.

No surprise, the trend shows that investors and users burned in the bear market are shifting to battle-tested protocols. While the bull market enabled newer projects to enjoy explosive growth lubricated by inflationary incentives and rampant speculation, it is proven protocols that enjoy the greatest investor confidence.

Cross-chain TVL also tells the story. Curve gained $800M during the last eight days, and Uniswap added $1B ,according to DeFi Llama. But the third-largest DEX, Binance Smart Chain-based PancakeSwap, is up only $200M.

Cross-chain TVL

Uniswap reclaimed its position as the largest decentralized exchange by cross-chain TVL, with Uniswap overtaking the stablecoin-focussed DEX Curve in recent weeks the first time in over 12 months.

Curve was among the hardest hit by the collapse of Terra’s UST stablecoin in May, with its TVL crashing to $5B from $19B throughout May and June.

The dominance of MakerDAO and Aave is also deepening over the Ethereum-based lending sector. MakerDAO has added roughly $850M since July 13, and Aave has posted sizable growth of $650M, according to The Defiant Terminal.

Aave’s primary rival, Compound, has grown $300M over the same period, while Yearn Finance is up just $38M.

The TVL of the broader DeFi sector is up 16.5% for the week, enjoying decent growth alongside the Ethereum-led rally. Protocols with sizable ETH deposits have performed among the strongest, with second-ranked dApp, Lido, up 38% in one week.