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DeFi market stumbles despite major advances in scaling ETH



More and more scaling solutions for Ethereum (ETH) want to secure part of the market for Decentralized Finance (DeFi). In addition to Polygon (MATIC), Arbitrum in particular has attracted attention in the past few days - which projects are using the scaling solution?

The DeFi market had to bleed again in the past few days. Compared to the previous week , Total Value Locked (TVL) fell from $ 113.28 billion to $ 104.41 billion at the time of going to press.


DeFi Llama

This means that the capital managed by DeFi protocols has shrunk by a total of 7.83 percent in the last seven days. In addition, the “ETF token” DeFi Pulse Index (DPI) has also lost 21.11 percent of its value this week. At press time, DPI is trading at $ 359.34.

Despite the poor price development of many DeFi tokens, a lot has happened this week. Especially projects dealing with Ethereum scaling solutions have made great strides.

Star investor Mark Cuban relies on Polygon (MATIC)

The Ethereum scaling solution polygon has achieved continuous growth in recent weeks and has also in strong price growth of MATIC reflected. In addition, DeFi heavyweights such as SushiSwap (SUSHI), Aave (AAVE), and Curve (CRV) rely on the scaling solution from Polygon. This allowed Polygon's TVL to jump from under $ 4 billion to $ 6.71 billion in the past 30 days.

DeFi Polygon
Source: DeFi Pulse

But not only the DeFi projects seem to recognize the potential of the scaling solution, the billion-dollar US investor Mark Cuban has also been relying on Polygon since this week.


But despite the prominent supporter, Polygon is not yet perfect. After the ETH scaling solution team announced a new SDK developer kit on May 26th, a technical malfunction occurred a short time later. The Matic Bridge, which enables tokens to be transferred from the Ethereum blockchain to the Polygon sidechain, was impassable for a short time.

As a result, Polygon co-founder Sandeep Nailwal made it clear on Twitter that the problem was a software bug that was quickly fixed with a “hotfix”.

Another ETH scaling solution enters the DeFi market

Arbitrum is another scaling solution that could shake up the DeFi space in the next few months. In contrast to Polygon, the scaling does not rely on sidechains, but on so-called optimistic rollups. On May 28th, Arbitrum announced that it had opened its mainnet to developers. This meant that developers on Arbitrum's whitelist can now use the scaling solution. One of the names on the Wishlist is the decentralized exchange UniSwap (UNI).

Arbitrum appeared to appear overnight, but the project is already enjoying great popularity in the UniSwap community. An overwhelming majority of UNI-holders voted in a Governace decision that the decentralized market Arbitrum i in its V3 protocol should. In response to the vote, UniSwap inventor Hayden Adams also expressed his satisfaction on Twitter and announced that work was already being done to integrate Arbitrum into the V3 protocol of DEX. However, not only UniSwap relies on Arbitrum, the decentralized exchanges Bancor and SushiSwap are also planning an integration.

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