The decentralized finance (DeFi) sector has seen a shift in recent quarters as the liquid staking category has outpaced the lending category. DEXs, oracles and DEX tokens have been key components of the DeFi ecosystem since the beginning of 2021. Experts link the surge in popularity to a growing demand for decentralized trading platforms and increasing interest in the sector as a whole. Although the DEX token category experienced a 44.3% increase in market cap, it began to lose its foothold in the sector in 2022, leading to a decrease in market share in the first quarter of 2023. Similarly, oracles reported a 2.8% point quarterly decrease in market share in the same quarter.

Conversely, the liquid staking category is relatively new to the DeFi sector but has grown rapidly since its introduction in Q3 2022. Proof-of-stake (PoS) technology was introduced to the Ethereum network in that quarter and allowed users to stake their ETH tokens and earn rewards in the form of liquidity pool tokens, which can be traded or used for other purposes. Consequently, the liquid staking category saw a 6.3% market share in the same quarter.

The overwhelming performance of liquid staking compared to lending could signal a change in investor behaviour, as investors are now more likely to stake their tokens to receive rewards instead of lending them to receive interest. This phenomenon indicates a shift in the wider DeFi ecosystem, where investors look for innovative ways to earn rewards.



Other News from Today