American banking giant JPMorgan has shed light of optimism in the decentralized finance (DeFi) and non-fungible tokens (NFT) sectors. According to a report titled ‘Resurgence in DeFi and NFTs: A Market Shift,’ the JPMorgan team led by Nikolaos Panigirtzoglou revealed a notable revival in DeFi and NFT activity. This resurgence can be attributed to the recent expectations of a US Bitcoin ETF and an improved sentiment in the crypto markets.
“Tentative signs of revival.”
– Nikolaos Panigirtzoglou
DeFi: A Natural Recovery
The report indicates that the recovery in the DeFi market, although positive in recent times, is still considered tentative. The analysts highlight that this increase comes after nearly two years of market decline, providing some optimism for the future trajectory of DeFi and NFT activity.
The surge in trading activity on decentralized exchanges (DEXs) plays a significant role in the natural recovery of DeFi. DEXs are gaining popularity in the crypto world due to their emphasis on user control, privacy, and security. Data from DefiLlama shows that trading volume on DEXs rose to $133.1 billion in March 2023, marking the third consecutive monthly increase.
“Some DeFi recovery is ‘natural,’ given the rise in trading activity in decentralized exchanges (DEX).”
– JPMorgan Analysts
Furthermore, the JPMorgan report highlights the contribution of liquid staking by Lido to the improvement in DeFi since early 2023. The Lido (LDO) liquid staking solution for Ethereum allows users to earn staking rewards without locking their assets.
Impact of Ether and the Emergence of New Platforms
The underperformance of Ether (ETH) compared to other cryptocurrencies has impacted the total value locked (TVL) measurement in DeFi. However, the JPMorgan analysts note that this could result in a mechanical revival due to the rising prices of several smaller cryptocurrencies in recent months.
The emergence of new blockchains, DeFi protocols, and NFT platforms is seen as encouraging by the bank. Despite the rise of DeFi, the Ethereum blockchain still faces challenges such as network scalability, low transaction speeds, and higher fees.
“[Ethereum] network scalability, low transaction speeds and higher fees.”
– JPMorgan Analysts
