Lower Ethereum Fees And Key Factor Could Revive DeFi Summer, Steno Research Says
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A report by Steno Research states that the decentralized finance (DeFi) summer on Ethereum and the crypto market could return as early as 2025. Four years after the fondly remembered DeFi summer of 2020, the total value locked (TVL) in protocols can hit an all-time high by early next year. However, the return of DeFi summer rests on two key factors. Lower Ethereum Fees Crucial To Attract Investors Ethereum (ETH) has historically led the DeFi wave, boasting the highest TVL locked into its protocols among all other smart-contract blockchains. According to DeFiLlama, the TVL locked in Ethereum-based protocols currently stands at approximately $50.11 billion. Ethereum is followed by Tron (TRX) and Solana (SOL), with a TVL of $8.27 billion and $4.99 billion, respectively. The enormous difference between TVL locked in Ethereum and all its competitors gives a fair idea about the significance of the Ethereum blockchain in the nascent space. Unsurprisingly, it’s evident that for any meaningful DeFi wave to rise, Ethereum-based protocols must be accessible to all industry enthusiasts, big and small alike. Steno Research posits that lower Ethereum network fees are important to make its ecosystem more accessible. Interest Rate Cuts Could Pave The Way For DeFi Summer The report by Steno Research posits that the change in U.S. interest rates will play a crucial role in determining DeFi’s comeback. Since the emerging market is largely denominated in USD, a series of rate cuts could increase investor’s risk appetite, leading them to invest in more risk-on assets, including digital assets. Mads Eberhardt, senior cryptocurrency analyst at Steno Research, noted: Interest rates are the most critical factor influencing the appeal of DeFi, as they determine whether investors are more inclined to seek out higher-risk opportunities in decentralized financial markets. The report adds that the DeFi summer of 2020 was…
Filed under: News - @ August 24, 2024 6:03 am