An Update on DeFi Markets

Market Update

With L1 szn taking hold of crypto markets, DeFi coins have fallen out of favor over the past few months. Coupled with May’s chaotic downturn, it’s easy to see why sentiment for DeFi has been so poor since.

When crypto assets set a local bottom in late July, investors turned their attention to DeFi, but this was quickly overrun by L1s. Last week, we saw yet another swift yet sharp correction in the crypto market, albeit not as extreme as May. Since then, DeFi tokens have found a new lease on life, with blue chips like CRV and SNX leading the bounce. When we examine DeFi performance since August, however, ALPHA stands out against other tokens.

One interesting finding is that the majority of DeFi tokens have underperformed FTX’s DEFIPERP index. And this is because DEFIPERP, while initially curated to track the state of Ethereum DeFi, has evolved into an index for Solana and Ethereum DeFi tokens. The index includes SOL as well, which introduces some inconsistency as it isn’t exactly a DeFi index.

According to independent research by 0xSisyphus, SOL’s weighting in the index grew from 1% to over 22% between Oct. 2020 and Sep. 2021. This essentially means the DEFIPERP is no longer an accurate benchmark for DeFi — and it explains why its outperforming indivi