The world of decentralized finance (DEFI) buzzes. With a total locked value (TVL) climbing to $ 160 billion, it is the highest that we have seen since May 2022. This metric is like a heart rate of Defi, showing us how much capital is linked in these protocols. It is an indicator of both the health of the ecosystem and its growth, and this recent jump is almost five times what we have seen at the lowest point in the previous cycle. But do you hang on-Are we really out of the woods?
Ethereum and Solana directed the pack. Ethereum TVL jumped 50% in the third quarter, from $ 54 billion in July to almost $ 97 billion. Solana has not been inactive either; It went from 10 billion to 13 billion dollars. Large players? Loan protocols like Aave, liquid development with Lido and replenishment services such as Eigenlayer.
But let’s be real: is this influx of liquidity a sign of strength or are we preparing for another cycle of fragility?
What stimulates the growth of DEFI and potential traps
Much of the recent TVL growth dates back to the loan and the loans. People put stablecoins in Aave for interest, while others borrow them for leverage. It is a self-eating cycle; As collateral values increase, borrowing increases, as is commercial activity.
Although the TVL number seems impressive, we must recognize that it is not all “rest capital”. A large part is at stake, entering and outside the leverages. This dependence on leverage is not only a quirk; It amplifies systemic risks and makes the market more fragile. A high lever effect can cause fluctuations in wild prices, especially during slowdowns when forced liquidations can trigger a fire sale, lower prices.
And then there is the interconnection network among the Defi protocols. When you fail, it can draw others with it, increasing the chances of instability. Automated liquidation mechanisms, while being intended to protect lenders, can more drop in the market by causing mass liquidations in the event of a drop in prices.
Stablecoins: the double -edged sword
In this landscape, stablecoins are like a raft of life. They offer a way to navigate the agitated waters of the traditional crypto by fixing their value to something stable, like fiduciary currencies. Think of the USDC and the USDT – they become a mass pin for payroll, especially in countries with economic disorders.
Argentina is an excellent example. With spiral inflation, startups turn to the salaries of stablescoin to protect employees from economic volatility. Not only does this simplify the wage bill, but it also strengthens confidence in cryptographic pay systems.
Stablecoins also play a crucial role during market slowdowns, providing users with liquidity and allowing users to lend, borrow and sell the farm without fear of wild price swings. The salary link to a stable value makes cryptographic payroll more predictable and more attractive for employees and employers.
Crypto friendly SME strategies
With companies (SMEs) evolving in evolution and cryptocurrency (SMEs) in Europe must be strategic. Here’s how they could do:
They must comply with regulatory standards, aligning with EU markets in the regulation of cryptocurrencies (Mica) to ensure transparency. Compliance can improve confidence and invite investments.
Diversification and use of stablecoins could reduce exposure to volatile assets, while robust risk management can help monitor leverage to avoid liquidations.
SMEs should also consider adopting compliance technologies to meet regulatory requirements, and training strategic partnerships both within the EU and with trusted foreign entities could mitigate geopolitical risks.
The trend towards stablescoin wages is likely to gain ground, driven by a need for stability on a volatile market. As more and more companies recognize advantages, this could become a standard practice, especially for startups and remote teams.
The rise of banking platforms and cryptographic payment platforms web3 opens the way to innovative payroll solutions. As the crypto matures, we can see new financial products adapted to companies and employees.
To summarize all this, while the push of Defi’s TVL suggests a return to capital, it raises questions on market stability. Dependence on leverage exchange introduces fragility, but stablescoins and careful risk management could offer some protection. The landscape changes and companies and workers must stay on their guard.
