Data from Messari shows that over the by 30 days, the majority of tokens listed on the site's DeFi Avails index have rallied by more than than 20%. A few standouts such as Maker's MKR, Synthetic Network Token (SNX) and SushiSwap'southward SUSHI gained more than 100% during the same fourth dimension frame.

DeFi assets index. Source: Messari.io

From January. ane to Jan. nine, the decentralized finance sector saw its total value locked (TVL) rising from $15.678 billion to a tape-loftier $23.092 billion, and this recovery to a new all-time high came about 4 months after the DeFi bull market place abruptly came to an end.

Now that Bitcoin (BTC) and Ether (ETH) have rallied to multiyear highs, investors are again turning their attention to the DeFi sector, and it's likely that the start of a new bull market, soaring TVL in the top DeFi platforms, and the steady integration of Ethereum alternatives are the primary reasons for the current surge.

Bitcoin and Ethereum carry the market higher

The last few months of bullish cost action from Bitcoin and Ether are undoubtedly having a positive issue on the entire cryptocurrency market. Currently, the combined market capitalizatio of the superlative two digital assets is more than $850 billion, comprising 80% of the total value of the cryptocurrency market.

As the prices of the pinnacle cryptocurrencies rise, some investors await for ways to maximize their profits, and the loftier staking yields and four-digit investment returns offered by many of the pocket-sized-cap tokens have proven to be an irresistible lure to traders.

Historical information shows that when Bitcoin and Ether prices are rallying, altcoins tend to follow, and when Bitcoin consolidates in a "predictable" range, altcoins and DeFi tokens commonly rally. This market dynamic could partially explain the recent surge in DeFi tokens.

Total value locked is on the rise

Data from DeFi Pulse shows that the total value locked across DeFi protocols has increased from $fifteen.36 billion to $22.74 billion over the past ten days. This sharp increment in TVL coincides with Bitcoin's rally from $29,000 to its $41,950 all-time high, and during the same time, Ether's price also rose from $740 to $one,300.

The total value locked in DeFi. Source: Defipulse.com

A number of high-contour partnerships and mergers between some of the elevation-ranked DeFi protocols are too attracting new funds to the sector. In early Dec 2020, Yearn.finance and SushiSwap, two of the summit DeFi projects, announced a merger that saw the protocols develop resources and integrate their liquidity pools to increase the total value locked.

Developments like this help to create a safer, more efficient user feel for members of the community and, in this instance, helped lead to a ascension in YFI toll from $18,255 at the outset of Nov. 26, 2020 to the Jan. 9 swing high at $39,990, an increase of 118%

Increasing DEX volume

Volume and transactions are key metrics used when evaluating the value of a DeFi projection and the strength of its community. One mode to determine this is to look at the daily book of a project'south decentralized exchange (DEX) to get a moving-picture show of how much value is transacted on the protocol during a particular time frame.

Daily DEX book. Source: DuneAnalytics.com

Since the showtime of 2020, the daily DEX book for the superlative-ranked DeFi projects has more than doubled from $900 meg on Jan.1 to a peak of $2.4 billion on Jan. 4, indicating a significant increase in user activity. This suggests that traders took advantage of the balderdash marketplace atmospheric condition that much of the cryptocurrency market was experiencing during that time.

With Ethereum ii.0 notwithstanding rolling out, a critical upshot to monitor during any DeFi boom is Etheruem gas fees and transaction speeds. Messari data likewise shows that DeFi tokens focused on layer-2 solutions rallied strongly as developers searched for ways to successfully integrate faster, lower-fee off-chain options that can work every bit alternatives to Etheruem.

As reported by Cointelegraph, tokens like Solana's SOL, Loopring'southward LRC, Matic and THORChain's RUNE have all rallied every bit developers continue to search for and experiment with layer-two options.