DeFi Activity Picking Up, Unique Addresses Surpasses 3 Million with Uniswap in the Lead
The percentage of ETH circulating supply locked in DeFi has also recovered from the June drop while TVL of the overall DeFi sector stands above $100bln with Ethereum controlling roughly 77% of it, which is 20% less than five months ago.
The market cap of decentralized finance (DeFi) has bounced off of a recent low of just under $61 billion and is currently hanging above $70 billion, as per CoinGecko. Though we are nowhere near the all-time high of about $144 billion from mid-May, it is a start.
A similar uptick in activity can be seen in the percentage of ETH circulating supply locked in DeFi protocols which have recovered from the June drop.
According to IntoTheBlock, currently, 9.33 million ETH (8% of the circulating supply) has been deposited into DeFi applications.
Amidst this, total DeFi users over time have now crossed 3 million. The milestone of 2 million unique addresses was broken only less than three months back, and before that, the 1 million level was hit in early December, 11 months after the 100k.
However, given that a user can have multiple addresses, these numbers are expected to be overestimated.
As per Dune Analytics, the popular DEX Uniswap has the highest number of total users at nearly 2.38 million, followed by Compound’s 325k. 264k users are on 1inch while 191.5k are using SushiSwap with 173k on Balancer, 123k using Kyber Network, MakerDAO’s 73k, and then Aave’s 65k users.
In terms of TVL, the total value locked in DeFi is currently at $108 billion, down from the $155 billion peak in mid-May but up from $86.76 billion low the same month.
While Ethereum controls roughly 77% of TVL in major platforms, it has recorded a drop of more than 20% compared to a level from five months ago, with BSC emerging as a contender capturing $15 billion TVL. Polygon has also started to chip away at Ethereum’s dominance.
Q1'21 marked the beginning of the long-awaited ecosystem wars.
Q2'21 picked up where the previous quarter left off.
TVL flows over the past three months continued to indicate Ethereum is the supreme platform, but it may not be the only party worth attending.
— Roberto Talamas (@RobertoTalamas) July 14, 2021
Liquidity in DeFi protocols soared throughout the Q2. As a result of this growth in liquidity, yield aggregators which funnel liquidity into DeFi had their AUM surge too. After a strong Q1 in which AUM rose 272%, Q2 ended down 2% after having peaked at $9.5 billion mid-quarter, stated Ryan Watkins of Messari.
Among all the sectors, the yield aggregator market actually saw the largest shift in market share in the quarter second with the resurgence of Yearn, the main attraction.
Yearn’s market share of the yield aggregator market jumped 137% in Q2 from 29% to 69%. In an impressive move, the protocol continued to see its AUM grow throughout the May crash, as we reported, even reaching a new all-time high of over $5 billion by the end of May.
Impact of liquidity mining on protocol revenue pic.twitter.com/9orjCu7KV1
— ✨ᕙ༼ຈل͜ຈ༽ᕗ✨ Andrew Kang (@Rewkang) July 16, 2021
When it comes to liquidity mining and how it affects the revenue on protocols, Andrew Kang of Mechanism Capital noted that “liquidity mining can be quite expensive relative to revenues produced, but it can be used to varying degrees of efficiency.”
In terms of projects, Compound Finance which had this feature throughout this year saw the highest revenues, but because it was paying a lot in incentives, net revenue has been negative all 2021.
Another lending protocol, Aave, implemented this feature recently in April, and after initial negative net revenue, the incentives created explosive growth for it on Polygon, and it soon became positive.
While CREAM has yet to implement liquidity mining, its net revenues are already comparable with Aave.