jakiro
Author: A Fox in Web3, Encryption KOL
Decentralized finance (DeFi) is often used to compare with traditional finance (TradFi), and it has become a huge and exponentially growing area in Web3.DeFi’s goal is highly consistent with the often heard statement in the crypto space that “providing banking services to people without bank accounts”.
The commitment to providing global financial services without banks is a lofty goal, and the charm of Web3 is largely due to it.This article aims to review the development of DeF in the past year from a current perspective.
Overview
Total locked value (TVL) reached $94.6 billion: The amount of locked funds in all DeFi protocols is huge.But considering that the market value of the entire crypto field is about US$2.8 trillion, still accounting for only about 3.3%, there is still a lot of room for growth.TVL has grown by about 1.5 times to about $65.4 billion since last year, but as a crypto sector, it remains fairly stable as it previously accounted for 3.5%.
The chart of DeFiLlama began in June 2018, less than 7 years ago, which fully demonstrates that DeFi is still in its infancy.However, in November 2021, DeFi TVL reached an all-time peak of $176 billion.Looking forward to TVL reaching this peak again.
Aave and Lido TVL reached $35.6 billion: Currently 37% of the DeFi TVL Super League is ETH staked in Aave and Lido.This shows that both Aave and Lido dominate.Lido was in the lead last year, but Aave then took the lead.Furthermore, most DeFi happens on Ethereum, which remains the most important blockchain.
Stablecoins have a market capitalization of $236 billion: Stablecoins account for more than 8.3% of the $2.8 trillion crypto market, more than double the DeFi.The growth rate of stablecoins continues to exceed DeFi TVL, indicating that it has truly achieved product market compatibility.
The data in DeFiLlama is very rich and it is even hard to start.The following further explores some of these categories and analyzes the key points.
Head blockchain
Ethereum is still the most important player in DeFi, accounting for 52% of TVL, but it is down from 58.3% last year.Solana is the second-largest contender with 8% TVL, but is still more than 6 times smaller than Ethereum.
Solana and BSC replaced Tron as the second and third largest public chains, respectively, squeezing Tron from second to fourth.The number of active addresses of these three is far greater than Ethereum. Solana has more than 4.3 million addresses, while Ethereum has only 442,000.
Ethereum has the largest number of DeFi protocols, currently with more than 1,320, up from more than 960 last year.
The Bitcoin network has 58 recorded DeFi protocols, up from 12 last year.Considering that Bitcoin is not designed for smart contracts, it still accounts for more than 4% of all DeFi TVLs, about $3.8 billion.
Head Agreement
There is no doubt that Aave is the top lending protocol in several EVM chains, including Ethereum, Sonic, Avalanche and Arbitrum, but Morpho is dominant on Base.
Most blockchains have their own lending and stablecoin projects.Restaking continues to evolve as many mainstream blockchains have their own protocols, with the largest player being Eigen Layer, but Pell Network has the widest coverage.
Stargate is the main cross-chain protocol for TVL spanning multiple chains.
The protocol on Ethereum dominates the same kind of protocols with the huge transaction volume of Ethereum DeFi.
Agreement Category
Borrowing, cross-chain bridges and liquidity staking TVLs are the highest, with a relatively small gap between $42 billion and $37 billion.Last year, liquidity pledge was far ahead, but the gap had narrowed, and lending and cross-chain bridges had already caught up.
Aave accounts for 44% of all lending and Lido accounts for 43% of all liquidity stakes, two of the two highest protocols in TVL in the entire DeFi space to date.
DEX has much less TVL, about $18 billion, with the top protocols being Uniswap, Curve and PancakeSwap, each running on more than 9 EVM chains.Even with TVL being lower, this is the most profitable part, with transaction fees reaching $5.9 million in the past 24 hours.With such a money-making effect, it is no surprise that DEX has over 1,600 agreements in total.
The cross-chain bridge category is dominated by Bitcoin equivalents packaged by WBTC and Binance Bitcoin.
Foundation and Ministry of Finance
The Ethereum Foundation held a vault size slightly higher than half of what it was a year ago and saw a sharp decline.Meanwhile, Mantle has a huge vault, but is mainly priced in its own tokens.
Some Ethereum-related projects also dominate the total vault, such as Aave, ENS, Lido and Sky.However, most of them also hold their own tokens.
If you ignore your own tokens, the rankings will be even more uneven.But few vaults are mainly based on stablecoins, so they are mainly affected by market volatility.
Rate of return
Most players deposit their funds in Lido for profit, which is probably because most people are confident about ETH as a long-term value storage tool, and Lido also dominates liquidity staking.Other ETH-based liquidity staking agreements also dominate, such as ether.fi.
JitoSOL’s staking SOL yields 7.75%, surpassing all other top yield products.Marinade and Jupiter have even higher SOL rates, at about 9%.
Sky Lending is TVL’s No. 1 low-risk stablecoin option, with its SUSDS stablecoin holding over $2.5 billion and yielding 4.5%.
DeFiLlama tracks over 15,000 liquidity pools of 468 protocols on 104 blockchains.
cost
Tether and Circle’s respective stablecoins are the largest fee-generating business to date in the crypto space.Tether alone has generated over $5.8 billion in revenue in the past year.
Over the past year, Gas on Ethereum has remained one of the biggest ways to spend on fees, with the total fees being not far from Circle, at $1.3 billion and $1.6 billion respectively.However, Ethereum’s handling fees are falling rapidly, and has not even entered the top 15 in the past 30 days.However, Ethereum-based protocols Lido and Uniswap are still earning high fees.
Solana’s fee ecosystem has grown the fastest in the past year, with Jito, Raydium and Pump.fun all earning huge fees.This is likely mainly due to the substantial growth of memecoin on Solana.
Bitcoin’s fees have dropped by about half since last year, and Bitcoin’s ranking has fallen from second to No. 14 as many other competitors in the fee market rise.
Stable Coin
The total market value of stablecoins has almost doubled, from $136 billion last year to $235 billion now.However, USDT and USDC still dominate, accounting for 62% and 26% respectively, accounting for 88% of the overall market.
The largest increase in share is Ethena’s USDe, which, although it was not launched a year ago, is now the third largest stablecoin with 2% of the market share.
Sky issued USDS tokens, breaking the dominance of DAI.However, Sky has a 3.5% market share after combining the market caps of DAI and USDS, and remains the third largest market player.
USDT, USDC, DAI/USDS and USDe together account for about 93% of the stablecoin market, with a market value of more than US$220 billion.
BlackRock’s BUIDL fund represents new entrants, indicating that TradFi wants to get a share of the market, too.
Financing
The DeFi field has raised more than US$113 billion in financing, with a total financing round of 6129.Financing reached its highest level between the end of 2021 and the beginning of 2022, but it is growing rapidly, exceeding $3.5 billion last month alone.
FTX and Celsius are one of the largest financing projects in the DeFi sector, raising $900 million and $750 million respectively, and are also one of the largest failed projects in the sector.The situation is similar for EOS, with its $4 billion financing barely cashing out.
Hacker attack
The DeFi space has suffered more than $11.2 billion in hacking, 25% of which comes from cross-chain bridges and the rest comes from other DeFi companies and protocols.
ByBit was hacked in February this year, the largest single hack in crypto history, with losses of over $1.4 billion.The second largest hacker attack occurred in 2022, with an attack on the Ronin network resulting in $624 million in losses.
North Korean group Lazarus is responsible for these two hacking attacks and becomes the largest hacker group in the field of encryption.
Most large-scale hacking attacks occur in the Ethereum ecosystem, probably because most of the liquidity of DeFi is concentrated in the Ethereum ecosystem.
Summarize
Overall, DeFi transaction volume is still dominated by Ethereum and its EVM ecosystem (with numerous L2s), and DeFi has risen since then.
Solana has seen significant growth over the past year and is catching up, and Bitcoin has also surprisingly begun to develop its own DeFi ecosystem, although it is not intended to be a smart contract platform.The Tron ecosystem seems to have lagged behind other ecosystems, but Tron remains an important hub for stablecoin activity.
