Closing the curtain of 2023: Is this a strange year for the DeFI Space?

Nagaya Technologies
6 min readFeb 17, 2024

2023 has officially come to its conclusion and while it has ended on a high note for the DeFI Space, the beginning was slightly strange. Expectations and Predictions were revised at the halfway mark of 2023 and a long drawn-out crypto winter came to its end. Despite all this, 2023 also continues to show progress for the DeFI Space as we build upon a much-awaited year for 2024. So how has 2023 unfolded for the DeFI Space? And how has it performed compared to its predecessor in 2022?

2023 — A Year of Unexpected Recovery

2023 presents itself with a different perspective for everybody. For some, it was a year of recovery but for others, it was a year of extraordinary growth. It was the year that began with minimalistic expectations due to the chaos that happened with DeFI Space in 2022 but ended up giving all the enthusiasts plenty more optimism to carry into this year of 2024. It was also a year filled with challenges and uncertainty for the DeFI Space as the post-pandemic era started to properly kick in.

The expectation for most of the stakeholders within the DeFI Space in 2023 was to put the nightmare of the previous year behind them and start to climb toward its peak again. 2023 was deemed as “The Year That Somehow Crypto Didn’t Die” and rightly so from the backlash of 3 major collapses. The Collapse of FTX especially at the tail end of 2022 was enough to put the spectator to believe that collapse and crashes are going to continue for the DeFI Space in the near future.


Unlike 2022 where DeFI was in the “Honeymoon” phase and eventually needed to minimize its expectations, 2023 started slowly and then carried its progress towards an unexpected recovery. The year begins with its first milestone where the DeFI Space finally reclaims the $1 Trillion Market Cap and offers some much-needed optimism for the coming year as the transaction volume from around the world also starts to recover its pace.

Just like how a strange year it will be, the market cap will tiptoe for quite some time as the rise of interest rates starts to affect the value of Digital Assets. The uncertainty from the global economy amidst a high amount of inflation and the high-interest rates will unfortunately continue to affect the DeFI Space but this time on a much positive note. The DeFI Space managed to close out the first quarter with growth of 50% reaching $1.185 trillion in Market Cap and a 24-hour trading volume of $48 billion. Amongst all this, Bitcoin managed to grab the highlight once again with a growth of 70% and outperforming many major indexes in the first quarter of 2023.

This high experience, in the beginning, was met with quite a challenging second quarter as regulatory crackdowns started to appear for DeFI Institutions. These crackdowns affected many of the large-cap DeFI Projects with the most notable ones being Ripple (XRP), Binance, and Coinbase. Ripple was the main highlight as it became a popular theme in the DeFI Space due to partial victory against the SEC marked a surge by more than 43% in July with other top 100 projects outperforming the market.

Other than that the second quarter was relatively a quiet month in terms of trading activity within the DeFI Space but Private and Public Fundraising for blockchain projects continues to show growth, especially within the Asia Region. This year also seems to see the beginning of a power shift that was previously dominated by Europe and America region to the Asia region with countries such as UAE, Singapore, and Vietnam continuing to show its prominence within the DeFI Space.

The growth in Asia Region would prove massive in supporting the uptick that happened during the third quarter of 2023. Adoption within Emerging Markets especially the Southeast Asia Region presents a 20% increase from the previous year due to the effect of inflation. Bitcoin seems to be the most favorite digital asset amongst all and helps the DeFI Space Market Cap $1.25 Trillion Mark for the first time since the middle of 2022.

It was also around this time that the word “To The Moon” rose back to popularity as enthusiasts were convinced that the “Winter” phase was probably over. The Bitcoin Spot ETF also became a much-discussed topic throughout the third quarter as Blackrock filed its application. Unfortunately, it’s not all glitz and glamor as the quarter ended with September officially becoming the worst month in 2023 for crypto-related exploits at $329.8 million in crypto theft.

The last quarter of 2023 is probably where things start to take off in the upward trajectory within the DeFI Space. Bitcoin outperformed the S&P 500 during the quarter (+9% vs. +4%) to officially close 2023 at +154%, its best year since 2020 when BTC rose 305%. Its competitor on the other hand Ethereum also made a strong comeback to $2,400 from a low of $1,151 throughout 2023.

Web 3.0 also became a discussed topic throughout the fourth quarter of 2023 with many projects involved in the space ushering a new trend in the DeFI Space. The Bitcoin Spot ETF approached the decisive stage in its journey and MICA regulation became a framework for further regulations to follow in the coming years. 2023 finally concludes with much to hope for and optimism for the year 2024 as more development comes to shape.

Looking back 2023 has been the preparing ground for what’s to come in 2024 and it turns out far greater than everybody expected. A lot of projects within the DeFI Space experience their worst and best performance after quite some time and prove how strange the year 2023 has been. The year will obviously be in the minds of many enthusiasts for the future but has it left a better memory than its predecessor of 2022?

DeFI Space in 2022 vs 2023

2022 and 2023 have presented themselves with their moments but choosing between both of them might be a really tall order for everyone. On one end we have the year 2022 where we are greeted with the fresh honeymoon moment of the highs in the DeFI Space and then being presented with the absolute lows of 3 major collapses as the year progresses. The other is the year 2023 which progresses quite slowly throughout the first few phases and proceeds to lift off in the final phase of the year.


While the focus in the year 2022 was on expanding unlimited growth, 2023 has shown us major progress in regulation and market maturity. 2023 seems to provide a better edge for everybody to choose from as slow methodical growth is always preferred over volatile ups and downs. The year also seems pivotal in correcting many of the unrealistic expectations outlined in the previous year and building up for continuous growth in 2024.

The year 2023 also presents a breakthrough in the regulation aspect of the DeFI Space as the introduction of the MICA Regulation and the Regulatory Crackdown seem to point out clarity for the space to progress in 2024. While the growth in other spaces such as Web 3, NFT, and Stable, coins is an edge from 2022 that was filled with the lack of trust and the rollercoaster of emotions associated with the DeFI Space.

All in All, 2023 was a much-needed recovery that was unexpected and left us with plenty to be excited about in the future of the DeFI Space. If 2022 was a reality check for the enthusiasts within the DeFI Space, 2023 came like a rainbow that arose after a stormy cloud. Everybody might want to revise their predictions after 2023 concludes but learning from 2022, it’s always best to keep your expectations humble and grounded in reality. It’s time to flip a new page for the DeFI Space and embark on a new journey in 2024!

We at Nagaya Technologies certainly believe that there is a huge potential to be found in the DeFI space. We hope that the development going around the world would be able to help to nurture growth for the rest of 2024 and beyond. That is also why we created the world’s first hybrid digital assets called Nagaya which is a part of the revolution needed towards sustainable Digital Assets for the Global DeFI space. Interested to know more about Nagaya, you can visit our website at

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Nagaya Technologies

NAGAYA (NGY) is a Gold-Backed Cryptocurrency with Subsidiary Projects. We aim to build Trust and Value through LEGALITY and TRANSPARENCY.