The total value locked (TVL) in Liqwid Finance has shown impressive growth, soaring 80% in April, according to an April 30 update. Liqwid Finance, a non-custodial money market, allows users to borrow and lend digital assets without an intermediary. DeFiLlama, an analytics platform, reports that Liqwid Finance manages $15.5 million in assets, representing an 80% increase from March 2023 and a 12% expansion in the past week.
The protocol now ranks among the fastest-growing dApps in the Cardano ecosystem, only behind Minswap, Indigo, and WingRiders. Liqwid Finance has a higher TVL than Djed, Cardano’s algorithmic stablecoin, and SundaeSwap, a decentralized exchange. However, opinions are divided on whether this rapid growth is sustainable and if it presents a potential risk to the blockchain ecosystem.
The sharp expansion of Liqwid Finance’s TVL comes alongside the overwhelming rejection of a proposed adjustment to liquidation parameters in several markets, including ADA, DJED, and SHEN. The amendment would have increased the liquidation bonus from 10% to 30% for ADA and DJED markets. While some argue that the platform’s growth indicates a strong user base and confidence in the project, others believe it may be a gamble that could ultimately harm Cardano’s DeFi ecosystem.
DeFi protocols on Cardano cumulatively manage just over $155 million in various assets. Although lower than Ethereum’s DeFi TVL, Cardano’s DeFi TVL has more than tripled since January, when it stood at about $50 million. Despite this growth, the current TVL remains half of its March 2022 peak, when Cardano’s DeFi protocols managed over $320 million in assets.
The expansion of Cardano’s TVL corresponds with a rallying ADA price. In the past four months, the coin has appreciated by 66% after hitting a low of $0.24 in December 2022. With the revival of crypto bull markets, DeFi activity has been rejuvenated following the 2022 crypto winter, in which asset prices nosedived.
As it stands, the DeFi TVL amounts to $49 billion, with Ethereum-based protocols commanding the lion’s share. Lido Finance, a liquidity staking protocol, is currently the largest DeFi protocol, with $12 billion in assets under management, followed by MakerDAO, which oversees $7.4 billion.
In summary, while the impressive growth of Liqwid Finance’s TVL and the overall expansion of Cardano’s TVL may signal a bright DeFi future, the potential risks should not be overlooked. The ongoing debate focuses on the sustainability of this rapid growth and its potential impact on the Cardano ecosystem. As with all blockchain-related investments, the pros and cons must be weighed carefully before making a decision.