Altcoins and decentralized finance (DeFi) tokens have been on a tear for the last two weeks and, as the end of August approaches, many projects are seeing their tokens reach all-time highs.
Data shows that a majority of the top-10 DeFi tokens gained more than 20% in the past 30-days, with projects like Bancor (BNT) and THORChain (RUNE) seeing gains in excess of 115%.
Here’s a look at some of the factors behind the current boost to DeFi tokens and the projects that are leading the way in terms of protocol upgrades and cross-chain interoperability.
Total value locked reaches a new all-time high
Data from DeFi Llama shows that the total value locked (TVL) in all DeFi protocols reached an all-time high at $157.06 billion on Aug. 22, and many analysts believe TVL is one of the best measures of sentiment within the DeFi ecosystem.
During the previous run-up, the TVL reaching an all-time high coincided with the surging prices of Bitcoin (BTC) and Ether (ETH), both of which reached their all-time highs around the same time.
This time around, Bitcoin and Ether are more than 24% below their all-time highs, yet the TVL in DeFi has surpassed its previous record.
This suggests that popular DeFi-related tokens with a multi-faceted utility within the crypto and DeFi ecosystem have attracted investors' attention. Typically, Uniswap (UNI) and SushiSwap (SUSHI) lead among DeFi tokens, but a few other strong gainers this week include a 22% increase for Convex Finance and a 17.84% increase from PancakeSwap.
Related: This time it’s different: When DeFi meets NFTs
New protocols attract attention
The past three months have also seen the arrival of popular new DeFi protocols like DinoSwap and the rise of Ethereum-network competitors, like Avalanche (AVAX), that have brought fresh energy and funds to the DeFi ecosystem.
DinoSwap and Avalanche have benefited from users fleeing the high fees on the Ethereum network due to the reduced transaction costs and faster processing times through their cross-chain bridges.
Avalanche launched its ‘Avalanche Rush’ DeFi incentive program on Aug. 18, which has brought a flurry of activity to the protocols involved, including Aave, Curve and SushiSwap. This liquidity mining event has proven quite popular and has helped to lift its native AVAX token back above $50 for the first time since February.
In the first half of the year, DeFi tokens rallied early and were followed by a surge in the price of NFTs and NFT-related assets. As summer draws to a close and NFTs notch new eye-watering record sales and volumes each day, it's possible that a sector rotation could occur soon and the DeFi sector may be warming up for a run of its own.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should conduct your own research when making a decision.