DeFi (Decentralized Finance)
What it shows
DeFi dominance shows the decentralized-finance sector's share of the market, which means a measure of risk appetite and capital rotation toward DeFi protocols.
How to read it
DeFi dominance is a barometer of risk appetite within crypto: its rise has historically accompanied rotation phases into alts and higher-risk sectors. Most relevant for coins in the DeFi ecosystem.
Parameters
- DeFi share / direction
- A rising DeFi share = capital seeking higher risk and yield; falling = a flight to safety.
- Positive reading: For DeFi assets: a rising sector share, meaning historically a favorable capital rotation.
- Negative reading: A falling DeFi share: historically capital is retreating from the riskier sector.
- Neutral reading: A stable share: no clear sector rotation.
Example
DeFi's market share rises, which means capital flows into decentralized-finance protocols, historically a sign of risk appetite and rotation toward alts. A falling DeFi share is risk-off; a stable share is balance.