Analysis

Algorand DeFi Is Booming. This is Why

Key Takeaways

  • Liquidity is flooding into Algorand’s DeFi ecosystem. The overall worth locked on Algorand hit $270 million for the primary time right this moment.
  • Hivemind Capital deployed $25 million price of capital in Algorand DeFi, giving the ecosystem a liquidity injection.
  • A number of different catalysts have helped Algorand growth forward of different initiatives, however the rise could also be shortlived because of the macro local weather.

Crypto funding agency Hivemind deploying $25 million into Algorand DeFi is considered one of a number of catalysts attracting liquidity to the Layer 1 chain. 

Algorand Receives VC Enhance

A brand new money injection has helped increase DeFi exercise on Algorand. 

Cash flowing into the Layer 1 blockchain’s ecosystem has soared this week following an announcement that Hivemind Capital had deployed 80 million ALGO tokens into numerous DeFi and governance applications throughout the Algorand ecosystem. On the present value of $0.31 per ALGO token, Hivemind’s dedication totals greater than $25 million. 

Following Hivemind’s announcement, the entire worth locked in DeFi apps on the Layer 1 hit a brand new all-time excessive, topping $270 million for the primary time within the blockchain’s historical past right this moment. Per DeFiLlama information, the entire worth locked on Algorand has jumped 53.95% this week, and a number of other Algorand-based DeFi protocols have benefited from the enhance in liquidity. Decentralized exchanges resembling Tinyman and Pact have registered double-digit features to their whole worth locked over the previous 24 hours, whereas AlgoFi, a one-stop store for lending, borrowing, and buying and selling, has shot up over 17%. 

Algorand’s ALGO token additionally reacted favorably to the information. After struggling a dip in response to Thursday’s hotter-than-expected CPI print, it jumped over 10%, helped by a broader market restoration. 

ALGO/USD chart (Supply: CoinGecko)

Extra Algorand Catalysts

Hivemind’s dedication to Algorand’s DeFi ecosystem shouldn’t be the one tailwind spurring curiosity within the Layer 1 chain. Elsewhere, the digital collectibles buying and selling app FIFA+ Accumulate has introduced a wave of soccer followers to Algorand because it launched on September 22. FIFA+ Accumulate lets customers assemble memorable moments from the highest matches in FIFA historical past and commerce them with different customers by means of the FIFA+ Accumulate market. To this point, the platform has bought over 158,000 packs by means of its genesis drop. It’s probably curiosity in FIFA+ Accumulate will proceed to extend within the build-up to the FIFA World Cup in November. 

One other notable replace for the Algorand ecosystem is FTX’s choice to help native USDC. Customers can now deposit and withdraw USDC stablecoins instantly between the Algorand blockchain and their alternate pockets. FTX beforehand solely supported ALGO token transactions. The replace makes it simpler for FTX customers to deposit dollar-denominated funds onto Algorand to be used within the blockchain’s DeFi ecosystem or on FIFA+ Accumulate. 

Extra broadly, Algorand has additionally secured a number of partnerships throughout the globe. Within the Philippines, fintech firm AID:Tech is making a cellular banking pockets resolution that makes use of the Algorand blockchain for transactions. El Salvador, the nation that made headlines final yr when it grew to become the primary to make Bitcoin authorized tender, has additionally declared Algorand its official blockchain companion. Extra lately, in a brand new July report, Italy’s central financial institution additionally revealed plans to leverage the Algorand blockchain for a doable central financial institution digital foreign money. 

With so many optimistic catalysts spurring adoption, it’s not stunning that Algorand has continued to develop whereas exercise on different Layer 1 chains declines. For the reason that begin of the yr, the entire worth locked in protocols on Algorand has elevated by 269%. Compared, the entire worth locked on Avalanche has dropped by 86%, whereas Solana is down 85%. Nonetheless, with world macroeconomic turmoil exhibiting no indicators of letting up, it could be troublesome for Algorand to proceed rising at an identical tempo going ahead. 

Disclosure: On the time of scripting this piece, the writer owned ETH, SOL, and a number of other different cryptocurrencies. 

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