With the value of funds locked in DeFi almost quadrupling in less than two months, the community is debating whether DeFi is in a bubble.
Data published by crypto market analytics firm Messari on July 29 indicates that the collective capitalization of the decentralized finance (DeFi) sector is equal to only 1.5% of the entire crypto capitalization.
According to Messari, the collective capitalization of every DeFi project put together is roughly $4.12 billion — less than that of the fifth-ranked crypto asset by market cap, Bitcoin Cash (BCH).
Watkins also noted that “literal meme coin” Dogecoin (DOGE) boasts a larger capitalization than every DeFi project with the exception of MakerDAO (MKR).
Despite the recent DeFi boom leading to claims the sector is overvalued, analyst Ryan Watkins believes the small size of the DeFi sector means it still has significant room to expand, arguing that it could benefit from a “reallocation” of capital from top 30 projects that are “useless first-gen cryptocurrencies, ghost town ‘ETH killers’, and dead projects.”
“DeFi doesn’t need new money flowing into crypto to continue its rise.