Algorand DeFi is booming. this is why


key takeaways

  • Liquidity is flooding Algorand’s DeFi ecosystem. The total value pegged at Algorand reached $270 million for the first time today.
  • Hivemind Capital deployed $25 million of capital into Algorand DeFi, giving the ecosystem a cash injection.
  • Several other catalysts have helped Algorand grow earlier than other projects, but the rise may be short-lived due to macro weather.

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Crypto investment firm Hivemind deploying $25 million in Algorand DeFi is one of several catalysts bringing liquidity into the Layer 1 chain.

Algorand gets a venture capital boost

A new injection of cash has helped boost DeFi activity on Algorand.

Money flowing into the Layer 1 blockchain ecosystem has skyrocketed this week after an ad that Hivemind Capital had deployed 80 million ALGO tokens in various DeFi and governance programs across the Algorand ecosystem. At the current price of $0.31 per ALGO token, Hivemind’s pledge is over $25 million.

Following Hivemind’s announcement, the total value locked in DeFi applications at Layer 1 reached a new all-time high, surpassing $270 million for the first time in blockchain history today. By DeFiLlama data, the total value locked in Algorand has risen 53.95% this week, with several Algorand-based DeFi protocols benefiting from increased liquidity. Decentralized exchanges like Tinyman and Pact have posted double-digit gains in their total value locked over the past 24 hours, while AlgoFi, a one-stop shop for borrowing, lending and trading, has soared more than 17%.

Algorand’s ALGO token also reacted favorably to the news. After suffering a drop in response to Thursday’s higher-than-expected CPI print, it jumped more than 10%, helped by a broader market rally.

ALGO/USD chart (Source: CoinGecko)

More Algorand Catalysts

Hivemind’s commitment to Algorand’s DeFi ecosystem isn’t the only tailwind spurring interest in the Layer 1 chain. On the other hand, digital collectibles trading app FIFA+ Collect has attracted a wave of soccer fans to Algorand since its launch on September 22. FIFA+ Collect allows users to collect memorable moments from the greatest matches in FIFA history and exchange them with other users through the FIFA+ Collect marketplace. . So far, the platform has sold over 158,000 packs through its genesis launch. Interest in FIFA+ Collect is likely to continue to grow in the build-up to the FIFA World Cup in November.

Another notable update to the Algorand ecosystem is FTX decision to support native USDC. Users can now deposit and withdraw USDC stablecoins directly between the Algorand blockchain and their exchange wallet. FTX previously only supported ALGO token transactions. The update makes it easier for FTX users to deposit dollar-denominated funds into Algorand for use in the DeFi blockchain ecosystem or FIFA+ Collect.

More generally, Algorand has also secured several partnerships around the world. In the Philippines, fintech company AID:Tech is creating a mobile banking wallet solution that uses the Algorand blockchain for transactions. El Salvador, the country that made headlines last year when it became the first to make Bitcoin legal tender, has also declared Algorand its official blockchain partner. More recently, in a new report from July, Italy’s central bank also revealed plans to leverage the Algorand blockchain for a potential central bank digital currency.

With so many positive catalysts spurring adoption, it’s no surprise that Algorand has continued to grow while activity on other Layer 1 chains declines. Since the beginning of the year, the total value locked in Algorand protocols has increased by 269%. By comparison, the total value pinned on Avalanche has been reduced by 86%, while Solana has been reduced by 85%. Still, with the global macroeconomic turmoil showing no signs of abating, it may be difficult for Algorand to continue growing at a similar rate going forward.

Disclosure: At the time of writing, the author owned ETH, SOL, and several other cryptocurrencies.

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