2024 has seen a flood of capital into decentralized finance (DeFi), driving the total value locked (TVL) up by 75.1% year-to-date (YTD) to $94.9 billion from $54.2 billion at the start of the year, according to a report by Binance Research.
This capital boost has benefited nearly every DeFi sector, across both major and niche markets, making previously inaccessible financial primitives available on-chain.
The Yield sector, after a 148.6% increase to $9.1 billion this year, is now the eighth largest DeFi market by TVL. On-chain interest rate derivatives platform Pendle has seen incredible growth this year, up 1962% to $4.8 billion.
This surge is thanks to the popularity of yield-bearing assets and the increased rate volatility driven by liquid restaking and speculative point systems.
According to Binance’s research team, stablecoins are on the rise too, with the circulating market cap reaching $161.1 billion this year, the highest in nearly two years. Ethena has capitalized on a market gap for a more capital-efficient yield-bearing stablecoin, surging 2730.4% to a $2.4 billion market cap.
Elsewhere, money markets have grown this year, with on-chain TVL up 47.2% to $32.7 billion. The demand for more flexible lending products, such as those that can incorporate long-tail assets as collateral, has fueled interest in modular lending. The report cites Morpho Blue and MetaMorpho, which attracted billions in deposits in just a few months.
Other highlights show that prediction markets printed a new peak this cycle, with TVL hitting a record $55.1 million after a 57.7% rise YTD. Historically thriving on political events, and with U.S. elections in sight, Polymarket is booming again, with average monthly volumes soaring from $6.1 million in 2023 to $42.0 million in 2024.
The market bounce has pumped up on-chain derivatives, the report notes, propelling average daily volumes from $1.8 billion last year to $5.4 billion this year. Hyperliquid has capitalized on this trend to increase its market share to 18.9%, making it the second largest by trading volume, trailing only dYdX.
"2024 has marked a turning point for DeFi, with substantial capital commitments underscoring the robustness of the sector," said Binance Research analysts. "The distribution of this capital across nearly every DeFi sub-sector highlights the diversification of the market, moving beyond just decentralized exchanges (DEXes) as primary drivers."
Despite this influx of on-chain liquidity, the sector’s public market valuations have yet to catch up with the wider crypto market. However, the steady flow of billions into DeFi shows its promise to meet ambitious revenue forecasts, such as the projection of $231.2 billion by 2030, the research concludes.