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As the fourth quarter began, the crypto market began to recover from its September losses, with the total market capitalisation of the space reaching a respectable $2.32 trillion at the time of writing.
The DeFi space appeared to be blooming as well, with the Total Value Locked this week increasing by 14%, surpassing the $160 billion mark and approaching the $200 billion mark. While the DeFi space appeared to grow, some DeFi tokens, such as AAVE and Curve, experienced perplexing price and network growth trajectories.
In mid-August, the Avalanche Foundation announced the Avalanche Rush, a $180 million liquidity mining incentive program to introduce more applications and assets to its growing DeFi ecosystem. It started with two of the largest DeFi protocols by total value locked (TVL), Aave and Curve. The same gave a massive boost to both networks.
The incentive program seemed to have fueled AVAX, AAVE, and Curve networks. This was the first time the second-ranked protocol in terms of TVL Aave had ported to a chain that calls itself a scaling solution particularly for Ethereum (other than Polygon).
AAVE’s overall TVL had surged by more than 20% in October itself with the total value locked standing at $14.9 billion at the time of writing.
However, the real gainer of the incentive program seemed to be Curve Finance, the automated market maker took over the top rank as per TVL, flipping AAVE. The protocol’s TVL rose by 20% and stood at $15.96 billion just falling short of the $16 billion mark.
Further, Avalanche’s overall TVL had also skyrocketed to $5.19 billion as of Oct 10, a figure more than 15 times larger than it was on August 18 when Avalanche Rush was announced.
The recent momentum and Avalanche Rush program pushed Avalanche to sixth place in the TVL rankings, trailing Fantom, which has $5.85 billion in TVL.
All the growth and no price gains?
Clearly, incentives worked their magic of wooing Defi protocols to deploy on other blockchains while promoting network and TVL growth for the protocols as well as the chain.
Usually, such a rise in TVL would come with positive price implications, however, this time was different, especially for AAVE. With Bitcoin’s price rising most altcoins either consolidated or saw minor market-driven gains.
It was possible that Bitcoin’s growing market dominance alongside decent prices gains made the market skeptical of entering trade in altcoins. Let alone mid-cap alts like AAVE, top alts like Cardano and Solana seemed to struggle too.
The waning confidence and low trade volumes for AAVE were few reasons why the alt seemed to struggle on the price front. However, Curve DAO Token’s price saw decent gains till October 9 but saw close to 7% losses at the time of writing.
CRV’s price gains could be credited to its recent surge in TVL taking the protocol up by five ranks to the top spot. Nonetheless, all in all, the rise in TVL gave the two protocols the necessary push they needed.