The cryptocurrency market experienced a significant surge in price as the first quarter of 2020 concluded. And all key Ethereum (ETH) DeFi DApps have witnessed strong growth in daily unique wallet activity in this period as tracked by DappRader.
The price explosion in the crypto space has, in turn, positively impacted decentralized applications (DApps) offering margin trading. It is pertinent to note here that the Coronavirus pandemic has led to global economic uncertainty. And this has generally affected the daily activities to a great extent. As a result, several key DApps have been considering a review of their key features.
Although the dollar value of the ETH saw a sharp 44% drop on March 12, this did to extend to its DApp usage which saw a healthy spike. The fact that each Ethereum DeFi DApp has its own distinct audience and use, is likely a contributing factor.
Jon Jordan, the communications director of DappRadar, spoke at length in his report on the state of DeFi DApps in a YouTube video.
MakerDAO is arguably one of the biggest DeFi DApps using the ETH protocol. It hit an upswing after enabling a multi-collateralization feature in November last year. This feature enables users to generate savings as well as trading tokens. It propelled MakerDAO to the position of a full-fledged DeFi App. Till February, 4,000+ new unique wallets have interacted with its smart contracts.
Now, as a DApp, MakerDAO has the functionality to set up savings accounts for DAI and also mint the stable, decentralized currency. However, it’s monthly retention rate has been relatively low at only an average of 9%. This is significant as it indicates that many users, after minting or locking DAI into savings, do not utilize it as intended. While a majority of them did not pay back the loan, many would just close down their savings account in the next month.
Last month we covered the concerns faced by MakerDAO and the parameter adjustments it has made to address them.
Synthetix started out as a Havven stablecoin project on its way to becoming a leading DeFi DApp. It enables its users to earn a part of its trading fees in the form of its token, SNX. Synthetix has been growing its monthly audience since launch, and also boasts of a better daily trade activity than MakerDAO, especially in terms of its retention characteristics. The March 2020 decline in SNX price has somewhat dampened the App, but the loss of confidence is likely to be short-lived.
It experienced a drop in March 2020, which is attributed to the drop in the SNX token price. This drop implies some loss in confidence that has to be rebuilt in soonest.
MakerDAO’s relaunch in last November had sparked a decline in Compound as both operate in the same capacity. However, its monthly retention rate ranges higher than MakerDAO. As many DeFi DApps are reviewing their business model with a possible overhaul, Compound hopes to ride on the sails of its recent upward trend in the coming months.
Previously, we had named Compound as one of the popular blockchain-based lending and borrowing platforms running on Ethereum.
Other ETH-based DeFi DApps which have registered interest during the first quarter of the year include dYdX and Fulcrum, as reported by DappRadar in its blog.
DeFi DApp ecosystem
Understanding their performance, however, goes beyond an isolated analysis of the DeFi DApps. It is also important to consider that they can all interact in their ecosystem. Incidentally, MakerDAO is still the most popular among all these DApps and attracts a large number of users to the DeFi space.
Moreover, the first quarter of 2020 has followed last year’s trend and seen a steady growth of interest among the audience in the Ethereum DeFi ecosystem. And as experts seem to believe, the recent fall in crypto prices, while tested the DApps on many fronts, would lead to more resilience in the products. Effectively, this could result in a continuity of momentum despite the Coronavirus crisis and its effect on the worldwide economy.