JPMorgan analysts led by Nikolaos Panigirtzoglou have recently released a report with a moderate outlook on the nascent recovery of decentralized finance (DeFi) and non-fungible tokens (NFTs). They caution against premature optimism, noting factors that could influence the market.
The report shows there has been a rise in NFT volume sales and an increase in the total value locked into DeFi after a nearly two-year downturn. However, the analysts emphasize the need to stay vigilant.
The recovery in DeFi is attributed to the increase in crypto trading facilitated by decentralized exchanges. Liquid staking is also seen as an important factor, primarily driven by Lido since early 2021. The cautious attitude towards the recovery is due to Ethereum’s challenges, such as high fees and slow transaction speeds.
The report additionally recognizes the emergence of new platforms and blockchains, such as Aptos, Sui, Sei, and Celestia. Blur. This is seen as a positive for the industry, but Ethereum’s underperformance relative to other cryptocurrencies affects the total value locked when measured in ether terms.
In conclusion, the analysts urge a watchful approach towards the DeFi and NFT recovery, as the success of upcoming Ethereum upgrades remains uncertain. They strongly emphasize the importance of understanding the market dynamics and the changing landscape of decentralized financial systems and non-fungible tokens.