DeFi: TVL Decline and Critique of KYC Feature in Uniswap
Date: 2023-10-22 Author: Dima Zakharov Categories: BUSINESS
DeFi TVL Decline
The decentralized finance (DeFi) sector continues to attract heightened attention from cryptocurrency investors. The latest data reveals trends related to the Total Value Locked (TVL) in DeFi protocols. As expected, after a period of growth, the TVL has decreased to $37.2 billion. These figures may raise questions about what caused this decline and which protocols and projects have proven to be the most resilient in this context.
Among the DeFi market leaders, the protocol Lido stands out with a TVL of $14.3 billion. However, it's worth noting that Maker ($7.62 billion) and JustLend ($4.82 billion) still hold significant positions in the rankings. Therefore, even though the TVL has decreased, some projects are still successfully maintaining their positions, indicating stability and trust within the DeFi community.
It's also essential to highlight that TVL in Ethereum applications has dropped to $20 billion, suggesting that the decrease is not limited to a single blockchain platform.
Surge in DEX Trading Volume
On the other hand, a significant trend in the world of DeFi is the increase in trading volume on decentralized exchanges (DEX). In the last 30 days, this metric reached an impressive $54.7 billion. This indicates that decentralized exchanges continue to gain traction and attract cryptocurrency traders.
Uniswap maintains its position as the market leader, accounting for 58.9% of the total trading volume. It remains a non-custodial exchange, attracting users with its decentralization and user-friendliness. The second-highest trading volume is held by PancakeSwap with a 13.2% share, and Curve ranks third with 6.6%. This growth in DEX trading may be associated with the continuously expanding range of tokens and trading opportunities available on these exchanges.
Criticism of KYC Feature in Uniswap
An essential topic for discussion within the DeFi community is the Know Your Customer (KYC) verification feature discovered in the repository of the fourth version of the Uniswap exchange. KYC is an authentication mechanism that may involve the collection of personal user data to comply with regulatory requirements.
However, the community is divided over the application of KYC in decentralized finance. Some believe it could be a positive step towards regulation and legitimacy in DeFi, especially considering the increasing attention from regulators. Others are concerned that KYC might compromise the anonymity and decentralization that make DeFi appealing to many users.
It's important to note that this KYC feature has not been implemented yet, and the discussion is ongoing within the community. Regardless of the outcome of this debate, it underscores the importance of finding a balance between regulation and preserving the key principles of decentralization in the DeFi sector.
