Key learning points
- Liquidity pours into Algorand’s DeFi ecosystem. The total value locked on Algorand hit $270 million today for the first time.
- Hivemind Capital put $25 million of capital into Algorand DeFi, providing a liquidity injection to the ecosystem.
- Several other catalysts have helped Algorand gain a head start on other projects, but the increase may be short-lived due to the macro climate.
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Crypto investment firm Hivemind deploying $25 million in Algorand DeFi is one of many catalysts pulling liquidity into the Layer 1 chain.
Algorand receives VC boost
A new cash injection has helped boost DeFi activity on Algorand.
The money pouring into the Layer 1 blockchain ecosystem has soared this week an announcement that Hivemind Capital had deployed 80 million ALGO tokens in various DeFi and governance programs in the Algorand ecosystem. At the current price of $0.31 per ALGO token, Hivemind’s pledge totals more than $25 million.
Following Hivemind’s announcement, the total value locked in DeFi apps on the Layer 1 reached a new all-time high, reaching $270 million today for the first time in the blockchain’s history. Per DeFiLlama facts, the total value locked on Algorand is up 53.95% this week, and several Algorand-based DeFi protocols have benefited from the boost in liquidity. Decentralized exchanges like Tinyman and Pact have posted double-digit gains over their total locked value over the past 24 hours, while AlgoFi, a one-stop shop for lending, borrowing, and trading, is up more than 17%.
Algorand’s ALGO token also reacted positively to the news. After a dip in response to Thursday’s higher-than-expected CPI pressure, it rose more than 10%, aided by a broader market recovery.
More Algorand Catalysts
Hivemind’s commitment to Algorand’s DeFi ecosystem isn’t the only tailwind fueling interest in the Layer 1 chain. Elsewhere, FIFA+ Collect, the digital collectible trading app, has drawn a wave of football fans to Algorand since its launch on September 22. FIFA+ Collect allows users to collect memorable moments from the top matches in FIFA history and trade them with other users through the FIFA+ Collect marketplace. So far, the platform has sold more than 158,000 packs during the origin drop. It is likely that interest in FIFA+ Collect will continue to grow ahead of the FIFA World Cup in November.
Another noteworthy update to the Algorand ecosystem is FTX’s decision to natively support 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 on Algorand for use in the blockchain’s DeFi ecosystem or on FIFA+ Collect.
More generally, Algorand has also established several partnerships around the world. In the Philippines, fintech company HELP: Tech develops 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 named Algorand its official blockchain partner. More recently, in a new July report, Italy’s central bank also revealed plans to use the Algorand blockchain for a possible central bank digital currency.
With so many positive catalysts driving adoption, it’s not surprising that Algorand has continued to grow while activity on other Layer 1 chains is declining. Since the beginning of the year, the total value recorded in protocols on Algorand has increased by 269%. In comparison, the total value locked on Avalanche is down 86%, while Solana is down 85%. But with the global macroeconomic turmoil showing no signs of abating, it could be difficult for Algorand to continue growing at a similar pace going forward.
Disclosure: At the time of writing this piece, the author owned ETH, SOL, and several other cryptocurrencies.