The DeFi market cap opened May 2022 at $111.2 billion and at the time of writing has corrected to around $65 – $70 billion. Partly due to a black swan event where the value of Terra (LUNA), one of the top DeFi coins by market cap, corrected from $90 to under $1 before bouncing.
One DeFi market cap prediction would be to expect a bounce from these levels or the 2021 swing low (just above $50 billion), back to retest $100 billion. In this guide we’ll attempt to predict some DeFi price forecasts and list the largest DeFi coins and some undervalued low market cap DeFi coins.
Top DeFi Coins by Market Cap
DeFi coins are the governance tokens of DeFi protocols, and some of the most well-established are:
- Avalanche (AVAX) – $10.7 billion
- Uniswap (UNI) – $4.1 billion
- Chainlink (LINK) – $3.9 billion
- Tezos (XTZ) – $1.8 billion
- Maker (MKR) – $1.7 billion
- Theta Network (THETA) – $1.7 billion
- Aave (AAVE) – $1.4 billion
- Fantom (FTM) – $1.2 billion
- The Graph (GRT) – $1.1 billion
- Terra (LUNA) – $1 billion
The list above can vary depending on the site, e.g. Coinmarketcap.com and Defimarketcap.io, depending if Wrapped Bitcoin (wBTC) and stablecoin Dai (DAI) are included in the top list.
The top 10 DeFi coins by market cap above are all listed to buy on crypto platform eToro.
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DeFi Price – Charts of the Top DeFi Coins by Market Cap
One investing strategy is to buy high marketcap DeFi coins that are well established but still undervalued compared to BTC and ETH. Another is to invest in low market cap DeFi coins that could be competitors to the more ‘blue chip’ DeFi projects and are undervalued compared to the rest of the DeFi ecosystem.
Below are some DeFi price charts for each of the top 10 DeFi coins by market capitalization, all of which are overdue for a bounce heading into 2023.
Avalanche
eToro describes Avalanche as a smart contracts platform that uses a mechanism for securing blockchain networks.
- AVAX market cap – $10.7 billion
- AVAX Coinmarket rank – #12
Uniswap
eToro describes Uniswap as an Ethereum based exchange that allows decentralised token swaps.
- UNI market cap – $4.1 billion
- UNI Coinmarket rank – #25
Chainlink
eToro describes the DeFi use case of Chainlink as providing a communication platform for messaging and digital services in international finance, healthcare, retail, and logistics industries.
- LINK market cap – $3.9 billion
- LINK Coinmarket rank – #26
Tezos
eToro describes Tezos as a crypto asset similar to BTC and ETH in its use of smart contracts and blockchain tech but without the need for hard forks which have been an issue for many crypto coins.
- XTZ market cap – $1.7 billion
- XTZ Coinmarketcap rank – #40
Maker
eToro describes the Maker platform as a decentralised autonomous organisation (DAO) on the Ethereum blockchain, and the framework for the DAI stablecoin. The Maker (MKR) token helps stabilise the price of the DAI token at $1 and enable management of the Dai Credit System.
Maker pumped 35% around the time of the LUNA crash to $0.83 – it has a similar use case and is essentially a competitor, so could be a good investment in the face of Terra losing credibility. That also shows the importance of having a diversified DeFi portfolio.
- MKR market cap – $1.7 billion
- MKR Coinmarketcap rank – #43
Theta Network
eToro describes Theta as a decentralised blockchain powered network purpose built for video streaming.
- THETA market cap – $1.7 billion
- THETA Coinmarketcap rank – #42
Aave
eToro describes AAVE as one of the largest emerging decentralised finance coins by market cap, an Ethereum-based currency that enables the creation of lending pools, allowing users to lend or borrow up to 17 different cryptocurrencies.
- AAVE market cap – $1.4 billion
- AAVE Coinmarketcap rank – #46
Fantom
eToro describes Fantom as a smart contract platform that aims to progress the scalability and transaction speed of blockchain and maintain cheap operating costs.
- FTM market cap – $1.2 billion
- FTM Coinmarketcap rank – #58
The Graph
eToro describes The Graph as a decentralised indexing protocol powering various applications in decentralised finance and throughout the Web3 ecosystem.
- GRT market cap – $1.1 billion
- GRT Coinmarketcap rank – #59
Terra
Founded by Terraform Labs in 2018, eToro describes Terra as a layer 1 blockchain built on the Cosmos SDK and Tendermint Consensus that operates a suite of stablecoins.
The May 2022 Luna crash from $90 to $0.83 barely registers on the LUNA price chart. LUNA is likely to recover from that black swan drop.
- LUNA market cap – $1 billion
- LUNA Coinmarket rank – #60
What is the DeFi Market Cap?
The DeFi market cap chart above (via Tradingview.com) is charted separately to the rest of the crypto market cap as a way to measure only the valuation of DeFi protocols and the DeFi tokens that power them as native coins.
The live market capitalization of each individual DeFi project can be calculated by multiplying its native DeFi token price by the number of tokens in the circulating supply. For fully diluted market cap the max supply is used, which includes coins still locked and not yet released into circulation.
For example Avalanche (AVAX), the top DeFi coin by market cap (if wBTC isn’t counted) has a live market cap of $10.7 billion currently, even after the 2022 correction, ranked #12 in terms of all crypto coins on Coinmarketcap, and #1 within the list of DeFi coins. Its fully diluted market cap is $15.6 billion as not all AVAX coins are yet in circulation.
Ethereum isn’t part of the DeFi market cap chart. Most DeFi coins do run on the Ethereum blockchain, but ETH is thought of as a Layer-1 coin, whereas the DeFi market cap is a measure of all Layer-2 coins in the DeFi ecosystem, separate to other cryptos. As of mid May 2022 Bitcoin, also not included in DeFi market cap charts, has a market cap of $602 bn, and ETH has a market capitalization of $288 bn.
Sites like DappRadar, DeFi Pulse and DeFi Llama also calculate the size of the DeFi ecosystem using TVL, total value locked. That includes all assets locked up in some way, e.g. for staking, farming yield, liquidity pools, and within smart contracts. DappRadar estimates the DeFi TVL to still be $100 billion in their DeFi overview section. Estimates vary though across different DeFi ecosystem tracking websites.
DeFi Market Cap History
The total DeFi market cap rose over 100x, or 10,000% since its 2020 open. Based on the Tradingview ‘TOTALDEFI’ chart above, and the open of each monthly candle, some notable metrics are:
- 2019 open – $1.15 billion
- 2020 open – $1.96 billion
- 2021 open – $21.6 billion
- All time high DeFi market cap (Nov 8th 2021) – $199.5 billion
- 2022 open – $161.6 billion
- 2022 low (currently) – $62.5 billion
- 2021 low (potential support level) – $52.5 billion
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DeFi Market Cap Prediction
Most of the current downtrend from the DeFi market cap ATH was in April and May. There was a drop in late November 2021 – February 2022, coinciding with Bitcoin crashing from $69k and Ethereum from $4.8k. Those all time highs were hit on Nov 8 2021, the same day the DeFi market cap top hit at $199.5 billion.
The total crypto market cap including both DeFi coins and other cryptocurrencies hit $3 trillion at its peak in Nov 2021, and is $1.4 trillion at the time of writing. The DeFi market cap bounced in February and March alongside the rest of the crypto markets, until the FUD surrounding Terra (LUNA) caused a panic sell. Some investors may have also been following the ‘sell in May and go away’ investing strategy.
The crypto and DeFi markets have also been increasingly correlated to the S&P500 which has been in a bear market in 2022 so far amid the Ukraine-Russia crisis and some recession fears, despite the Federal Reserve combating inflation and some positive bullish news coming out of the recent FOMC meeting.
DeFi Institutional Interest
Despite the volatility of crypto prices and DeFi, institutions are increasingly interested in it – Goldman Sachs predicted in 2022 that Bitcoin could hit $100,000. They have also mentioned decentralized finance in several of their investing reports for their private clients.
In one DeFi report Goldman Sachs stated decentalized applications (dApps) and other innovations ‘have potential for adoption’ in TradFi (traditional finance) which has been valued at over $500 trillion in size. DeFi is yet to capture even 1% of that market share, so has room to grow, short term bearish downtrends aside.
DeFi Market Cap Chart – Fibonacci Retracement Levels
DeFi market cap chart – monthly
The $50 – $55 billion area is both psychological support and has confluence with the 2021 swing low, so should be a good area to look for a bounce. Investors could also begin scaling into a position on various DeFi coins by dollar cost averaging in now, at the current $70 billion DeFi market cap.
One resistance level would be the 0.786 Fibonacci level around $80 – $85 billion. That level could even be reclaimed by the end of May 2022. If the monthly candle closed above that Fib, with just a wick below it, that would be bullish. The 0.618 Fib at $108 billion could then be a price target and a good point to take partial profits on any DeFi coins you do invest in.
Is DeFi a Good Investment?
In the bigger picture, the DeFi market cap is still in a bull cycle up over 3,500% since the 2020 open. A 66% retracement from a top is standard and also occurred in 2021 from $155bn down to $52bn. It didn’t indicate the macro top was in yet, that year.
The current DeFi market structure would only flip bearish if monthly candles start closing under the 2021 lows of $52 billion, and that could still only indicate a reaccumulation cycle before continuation to the upside, in a new bull run around 2023 – 2024.
The panic sell off of Terra (LUNA) and UST is not related to the DeFi overview in terms of fundamental analysis (FA). Since decentralized finance as a concept hasn’t changed, the market movements related to Terra could be seen as a good time to invest and ‘buy the dip’, on other DeFi coins.
Low Market Cap DeFi Coins Holding Well
Many low market cap DeFi coins have not been affected by the 2022 DeFi crash and have held their valuation.
For example DeFi Coin (DEFC) which has a similar utility to Uniswap (UNI).
Like Uniswap and UNI, the DeFi Coin project has its own decentralized exchange (DEX) DeFi Swap for token swaps without the need of a centralized entity. DEFC has been in a short-term bull run in May 2022.
In the first week of May DEFC spiked 175% in 24 hours then continued to move up 400%. DeFi Coin has also already retracted over 98% since the DEFC all time high of $4 set in July 2021, making it undervalued without much selling pressure.
Its live market cap is currently $5.4 million ($46.5 million fully diluted), and Coinmarketcap ranking #4722.
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