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Decentralized funding protocols (challenge) experienced a boom in total value locked on various staking pools in January. The market reached $74.6 billion in staked assets, up 26% year-on-year.
In his last monthly report, dappradar described the growth of the challenging sector alongside rejuvenated (nft) non fungible token markets that also had increases in the volume of trade and sales.
Optimism appears to be the best challenge, with a 57.44 per cent increase in the Locked Total Value (LSV) to $808 million. Blockchain analyst sara gherghelas said cointelegraph that optimism's transaction volumes were probably driven by a "learn-to-earn" incentives program that ended midway through January.
A sharp decline in day-to-day transactions in January. 17 suggests that educational incentive programs might play a role in driving DeFi adoption and onboarding, as Gherghelas explained:
"By offering a hands-on experience, Such incentives can help users to better understand the challenge technologies and their potential benefits, foster increased uptake and use of challenging products and services."
Solana's LTV went up 57% to $548 million, spurred by Marinade Finance's introduction of a symbolic incentive system rewarding SOL depositors with a mSOL derivative. Between December and January, the protocol was $152 million dwt.
It’s not all positive for the Solana ecosystem, though, with platform Everlend announcing its closure on Feb. 1, citing a lack of liquidity for shutting down its service.
Related: NFT sales topped 101 million in 2022: DappRadar report
The upcoming upgrade of Ethereum in Shanghai also involves staking in challenge due to the anticipated opening of withdrawals from Ethereum staking agreements. Lido finance has overturned dao maker as the biggest challenge protocol in January, driven by the popularity of derived liquid staking protocols.
According to Gherghelas, Lido's liquid staking solutions have turned out to be an important draw card for users seeking to maximize staking returns.
"What distinguishes Lido from other challenging protocols is its innovative staking solution, which gives users access to liquid Ether staking without committing to a minimum of 32 traditional ETH."
Lido has invested over $8 billion in its platform, up more than 36 per cent since December 2022. Gherghelas pointed to the recent upturn in cryptocurrency markets contributing to the increase in the challenge LTV:
"The crypto market has been bullish, leading to greater investor confidence and an influx of capital into the challenging space."
Free trade agreements also marked the beginning of a strong year. The volume of transactions reached $946 million, representing a 38% month-on-month increase and the largest volume of transactions since June 2022.
Etheum continues to dominate the NFT market, representing 78.5% of total trade volume, worth $659 million in January. Yuga laboratories had a strong month, with $324 million in transaction volume from its proprietary collections.
The NFT degods collections and the kingdom of apes contributed to a 23% increase in Solana's NFT transaction volume. Meanwhile, Polygon saw a significant 124% jump in its NFT trading volume and a total of 4.5 million NFT sales, driven in part by the Collect Donald Trump Cards.
As Cointelegraph explored at the end of 2022, unique active wallet data comparing 2022 to 2021 showed a 50% increase, with DeFi, NFTs and blockchain gaming-driven activity and trading volumes.
