2020 has been dubbed the year of decentralized finance (DeFi). The DeFi ecosystem is made up of both decentralized finance and decentralized applications (dApps).
According to DappRadar, the Ethereum blockchain currently houses about 96% of all DeFi ecosystem transactions. The introduction of yield farming has furthermore attracted investors to this fast-growing space. Better incentives also resulted in a 10x increase of the DeFi ecosystem during Q3 of 2020.
This article will cover in-depth details like transaction volume, total assets locked, earnings, etc. Important details like the other blockchain platforms (TRON, Ontology, EOS, etc.) housing a small portion of DeFi will also be analyzed.
It is important to note that:
- The total value locked on Ethereum at Q3 2020 was above $10 billion.
- Ethereum, EOS, TRON are in charge of approximately 97% of the total daily active wallet.
- Ontology, IOST, and NEO recently joined the DeFi space.
- Successful dApp growth has been linked to better incentives and yield farming.
- Uniswap has the highest earnings, followed by SushiSwap and Balancer.
- Several blockchain platforms have indicated interest in venturing into the DeFi space.
- Q3 2020 recorded the highest DeFi growth so far.
- Ethereum is at the top of the DeFi growth. It currently holds 96% of the total DeFi ecosystem transaction volume.
- Q3 saw the DeFi ecosystem cross the $123 billion transaction volume benchmark.
- Ethereum furthermore accounted for over 57% of daily active wallets in Q3 2020. EOS and TRON, on the other hand, held about 5%, and 35% respectively.
Apart from transaction volume, total value locked (TVL) was also up by 380% from Q2 2020. At the end of Q3 2020, TVL was approximately $10 billion. The dApps that brought about the most increase include Uniswap, MakerDAO, and Curve. Uniswap growth was mainly due to the launch of its UNI governance token.
As previously stated, Ethereum accounts for 56% of daily active wallets, with its major contributors being Uniswap, SushiSwap, Balancer, and Compound. The biggest contributors on EOS protocol include the DeFis Network, Defibox, and Dmd.Finance. Together they contributed a total of 4,300 daily active wallets.
Lastly, major dApps contributors on TRON include Zethyr Finance, JUST, and Oikos.cash. Also, new DeFi projects like Sun, Unifi Protocol, and SharkTron contributed about 32,000 daily active wallets.
Several protocols like NEO, IOST, and Ontology also joined the DeFi train in Q3 2020.
Yield farming and governance tokens
The launch of new governance tokens and yield farming has been linked to the current DeFi boom in Q3 2020. Yield farming was first launched by Synthetix, but it gained popularity through Compound.
Launched in June, Compound experienced exponential growth, reaching up to $4 billion by the middle of the same month.
SushiSwap was then launched in August. The project practically catapulted the DeFi ecosystem sky high. With Uniswap as a base, the project raised over a $6 billion transaction volume and migrated in September.
Following the migration of SushiSwap, Uniswap launched its UNI governance token. The token was a huge success with immediate listings on top exchanges like Coinbase Pro, etc. Transaction volume peaked and $33 billion was raised. This amount alone accounted for about 60% of the DeFi ecosystem total transaction volume.
While Ethereum currently tops the chart for the blockchain holding DeFi protocols, the network faces a huge issue – scalability. As DeFi protocols increase on the network, Ethereum is showing serious signs of congestion. Gas prices are ridiculously high and the network is generally slow. With this in mind, several blockchain platforms are turning up as a replacement for Ethereum. They include Polkadot, Cardano, and Binance.
Find out more about the DeFi ecosystem on the Altcoin Buzz YouTube channel.