“DeFi is Inevitable,” 4Q20 Recorded 100k New Addresses Daily: ConsenSys Report

“This year Ethereum proved that an entire decentralized financial (DeFi) ecosystem is inevitable,” reads ConsenSys’ DeFi 4Q20 report.

While this gained momentum last year, with all the drama surrounding the retail traders pumping up the prices of heavily shorted stock prices and now being suspended from trading them on Robinhood, a popular trading venue among retailers and other platforms are working on taking this moment forward in speed this year.

The WSB mods want power. I want decentralization.

— WSB Chairman (@WSBChairman) January 28, 2021

After the DeFi sector heated up in Q2 and cooled down in the subsequent quarter, Q4 saw its rise yet again. By the end of this quarter, 1,195,000 unique Ethereum addresses interacted with DeFi protocols, more than doubling in the quarter. Moreover, on average, 100k new addresses were created daily in Q4 2020. Custody providers and professional traders are also increasingly seeking exposure to the sector. The report states,

“With interest rates on trading pairs or lending protocols in the range of 5-12% APY compared to US treasuries at 0.92% yield, it’s easy to see the appeal.”

So much activity had an obvious effect on the fees, which saw “tremendous growth.” Besides the team, these fees also go to the uses of the applications.

During this period, stablecoins, which are essential to the rise of DeFi, also continued their success. 70% of all the stablecoins worth $20 ln as of Jan. 1, 2021, are issued on Ethereum only.

Interestingly, “stablecoins are now responsible for more trade volume on Ethereum than the asset that pays for computation — ether (ETH) — itself,” at almost $1.6 trillion, notes the report.

DeFi is also attracting other blockchains, and by the start of 2021, more than 138,774 BTC (about $3.9 billion) has been converted to ERC-20s.

The report also covered the growing trend of NFTs, whose marketplace value is estimated to be $52,293,650.

Despite all this growth, “DeFi is still in its infancy as an industry” and has a huge room for growth with “many new innovations just on the horizon that will further increase the accessibility and variability of DeFi.”