DeFi’s total blocked value reached $18 billion thanks to Ether’s recovery and SushiSwap profits

The total blocked value of DeFi is reaching new highs of $18 billion, but the increase in Ether and Bitcoin is responsible for much of the growth.

The total blocked value of DeFi, an indicator that tracks the amount of assets committed to the DeFi ecosystem, has shot up to $18 billion, according to DeFi Pulse.

While the chart may suggest that adoption of DeFi is growing, it requires some interpretation to be properly understood. The total locked value is often an imperfect metric in these scenarios. Differences in how it is counted, protocols that take steps to artificially boost it, or simply price spikes in the underlying assets can create the appearance of growth where there might not be any.

DappRadar’s adjusted LTV metric, which calculates the total value locked in by setting asset prices at the beginning of the period under scrutiny, can help shed light on what is happening.

The adjusted metrics suggest that DeFi has, in fact, experienced very little growth since October 2020. Measured at constant prices, the total locked-in value has remained around $9 billion for the entire Immediate Bitcoin review (BTC) and Ether (ETH) bull markets. This means that there was no net inflow of new assets; instead, it’s the existing asset supply that dramatically increased in value.

However, there is a considerable jump in the LTV between January 4th and 5th, which is largely attributed to SushiSwap. The decentralized exchange continues to attract staggering amounts of liquidity through its ongoing SUSHI rewards. The recently launched Onsen menu aims to provide incentives for a rotating set of liquidity pools, including primarily smaller tokens. The exchange attracted about 2,000 BTC ($62 million), 40 million Dai and 60,000 ETH ($60 million) in one day.

Another major winner over its LTV is Synthetix Network Token (SNX), but the increase can be attributed largely to a 30% increase in the price of SNX. The token is used to secure synthetic assets coined on the platform, so price increases still have a direct effect on platform adoption.

Although DeFi entries have recently stagnated, the space still shows healthy volume and adoption. It is likely that Ethereum’s high rates are stifling further growth, but accumulation-based scaling technologies may soon compensate.