Thread by @CrossChainAlex

🧵 $30B in TVL wiped out by the $LUNA and $UST collapse. Total #DeFi TVL slashed in half over the last month.

What does the future hold for DeFi on the major #Layer1 chains and protocols? My thoughts in 10 tweets. 1/10

#DeFi exploded from $19B TVL at the start of 2021 to $280B by the end of 2022, holding steady until April of this year.

It now stands at $128B with the majority of that over 50% drop coming in the last month as investors rush for the exits. 2/10

Why? A negative global macro outlook with inflation and rising interest rates leading to sell off in traditional markets.

The knock on effect on $BTC compounded by the shock from the $LUNA and $UST fallout has nervous investors going risk off. 3/10

But risk off into which assets? Large outflows into $BTC and fiat of course.

But those that remain in #DeFi appear to be looking to the relative safety and security of #Ethereum.

#ETH TVL dominance is at 65% (2/3 of all TVL!) which is an 18% increase vs. 1 month ago. 4/10

And on #ETH itself there's a longer term trend of consolidation into tried and tested high TVL #DeFi 1.0 protocols.

#MakerDAO #Lido #Aave and #Curve now account for 49% of TVL on #Ethereum up from 36% at the Jan 2022 DeFi peak.

$MKR $DAI $LDO $AAVE $CRV 5/10

What does this mean? Many chains have emerged, but many have failed to sustain significant market share (for now).

The cheaper and faster narrative is not enough. #Ethereum still has the security, user base and devs. It's where whales feel safe. 6/10

Many tout #Layer2 and #ETH 2.0 as the solution to speed and cost, strengthening the Ethereum dominance narrative.

Some other chains may die, but not all. I'm still watching the ones below sorted by active protocols (and high TVL).

#ETH #BSC #MATIC #FTM #AVAX #SOL #CRO 7/10

Regardless of chain #DeFi is very risky. On the protocol level I expect focus on practical #DEX #lending and #yield options with high TVL and "realistic" returns.

Interested in growth of #liquidstaking (e.g. #LDO) and #derivates (e.g. #DYDX #GMX #DPX and #RBN). 8/10

This is not to say that new innovations will not emerge. #DeFi is far from dead. We're just potentially in survival mode for now.

I'm personally interested in #Ethereum or #Layer2 solutions/protocols meeting real needs with a real business/revenue model. 9/10

This is one of the ways I look at the market to catch trends and position myself in the market.

If you've found it useful give the thread a retweet and give me a follow for my daily musings.

Let me know if there's any topics you'd like me to cover. 🙏 10/10