Here’s how an Ethereum hard fork in 2023 changed the DeFi market forever

As the year comes to a close, the DeFi market is also experiencing changes that will be seen throughout 2023. One important change is the Ethereum Shapella hard fork which not only impacted the market but seems to have completely changed the landscape Defi scene.

Hard fork Ethereum Shapella 

The Ethereum mainnet underwent the Shanghai hard fork in early April this year, allowing the option to withdraw ETH due to staked validators. The event is expected to be an extremely bearish event as the crypto market is concerned that investors may choose to withdraw their staked ETH.

However, after the hard fork, the opposite happened as more money started pouring into staking protocols. With the option and security to withdraw their assets at any time, investors have become more involved in staking, the results of which can be seen in the DeFi market.

The liquidity staking protocol category saw an increase starting in March, and by the end of June, it had surpassed the DEX category. DEX has become the second largest type of protocol since 2021 and is over.

Since the beginning of 2023, total value locked (TVL) in liquidity staking protocols has increased by 334%, nearly double the 176% growth DEXs saw during the same period. As of today, liquidity staking protocols hold over $32 billion in TVL, while DEXs  receive $21 billion for the DeFi market.

Lido DAO, the largest protocol in this liquidity staking category, outperforms other leading DeFi applications (Dapps), including AAVE, in the Lending category, the largest in TVL. Currently, Lido has a TVL worth more than 22.3 billion USD, double AAVE’s figure of 10.9 billion USD.

By 2024, the demand for DeFi is expected to increase and naturally, investors will choose to deposit their funds in the safest form of yield, which can become a validator on Ethereum . This will further promote the steady increase of the TVL of the liquidity staking protocol.

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