Defis are so big that they are already in the top 30 of banks worldwide

Defis are so big that they are already in the top 30 of banks worldwide

An institutional report revealed that, in comparison, decentralized finance (DeFi) would be in the top 31 of banks worldwide, taking into account the total blocked value (TLV) that they currently handle.

This study, published by the American venture capital firm Andressen Horowitz, analyzes the current state of the ecosystem, the bitcoin market and cryptocurrencies.

In the DeFi section, the firm details that 2022 meant a year of growth. According to the report, by May 12, the date on which the study sample was taken, the total TLV was 128 billion dollars, amount that placed her in the top 31. However, it is worth noting that, according to DeFi Llama data, by March 5 the TLV of DeFi exceeded USD 200 billion, which fell miserably over 100 billion, to the current date, as a result of what happened with the Terra network and UST. A drop of more than 50%.

On May 12, the market had lost, in days, more than 30% of its TLV. Source: DeFi Llama.

Although the values at the beginning of May could make the DeFi climb positions within the comparison made by the firm Andressen Horowitz, it is noteworthy that it is still very far from the first steps, which are dominated by the world’s largest banks.

The list is led by the JP Morgan bank which, despite being averse to the use of Bitcoin, has opened its own investment portfolio. Source: Andressen Horowitz.

The top 4 of the banks that lead this list are made up of American giants: JP Morgan, Bank of America, Wells Fargo and Citigroup. Everyone easily passes the trillion dollars in assets, except for JP Morgan surpassing $3 trillion. This leaves, by comparison, the current $109 billion found in Defis well below the top 4.

Referring to the TLV, or total blocked value, it is the amount of funds that a DeFi has and that are kept deposited in its smart contract. The value fluctuates depending on the value of the cryptocurrencies and the tokens that a DeFi owns. With the recent market downturn, the TLV is affected.

Defis have caught the attention of regulators

While DeFi have lost a considerable part of their TLV, between the end of 2021 and the first half of 2022, the TLV remained above 200 billion. A rather considerable value that has raised alerts among regulators, driven in turn, by what happened by the case of Terra.

This last week CriptoNoticias has reported how several regulatory agencies have raised their voice of alert to the situation of DeFi and their “free will” by not having clear regulations. One of these cases was that of the United States Securities and Exchange Commission (SEC) which, through its chairman Gary Gensler, he warned that investors need greater protection.

On the other side of the planet, and almost simultaneously, the Executive Director of Settlement and Prevention of Money Laundering in Germany, Birgit Rolphe, he emphasized that a better legal framework must be offered, if defis are to compete with the current financial system.

It should be clarified that these regulatory requests are not something new. Although they are driven by the Terra issue, there has been a record for years of how the SEC has asked for regulatory clarity for defis.