The total market value of DeFi has risen by 700% in 2 months, but many people still say: Can’t see it, look down on it, don’t understand it, can’t keep up
Editor's Note: This article comes fromVernacular Blockchain (ID: hellobtc), Author: JackyLHH, reproduced by Odaily with authorization.
Editor's Note: This article comes from
Vernacular Blockchain (ID: hellobtc)
, Author: JackyLHH, reproduced by Odaily with authorization.
Since the Bitcoin block reward halved in May and the dust settled, we can see that the focus of the entire encryption industry has shifted to ETH 2.0, IPFS and DeFi.
When the overall cryptocurrency market is "no waves", the Tokens of many DeFi projects have performed exceptionally brightly - there have been 2 to 4 times price increases. Compound, a decentralized lending platform, has become a recent star. Through the method of "borrowing and mining", it has increased the total value of loaned encrypted assets by about 850 million US dollars in just a few weeks, and the price of its Token COMP is even higher. It hit a high of $372.27 on June 21.
image description Figure: Price trend of Compound Token COMP, source: CoinGecko At the same time, according to statistics from DeFi Market Cap, the current total market value of DeFi projects has exceeded 7.4 billion US dollars, while two months ago, the total market value was less than 1 billion US dollars. In other words, in just over two months, the total market value of DeFi projects has soared by more than 700%. In addition, the locked funds on DeFi projects have also shown explosive growth, and have exceeded 2.08 billion US dollars so far. On April 14, the total market value of DeFi was 1 billion US dollars; On June 9, the total market value of DeFi reached 2 billion US dollars;
On June 25, the total market value of DeFi exceeded US$6 billion;
DeFi VS CeFi
On July 4th, the total market value of DeFi was 6.6 billion US dollars;
On July 5, DeFi had a total market capitalization of $7 billion.
Whether it is the total market value, the size of funds locked up, or the price of Token, DeFi projects have shown a blowout development. Is the spring of DeFi coming? How will the future develop and how will it affect our lives? Today, let's talk about these topics.
secondary title
Before diving into DeFi, it’s worth understanding what DeFi is and its main pros and cons.
DeFi is the abbreviation of Decentralized Finance (decentralized finance), also known as Open Finance (open finance). DeFi uses blockchain technology and smart contract technology to replace traditional trust based on people or third-party institutions with decentralized protocols to build a transparent and open financial system.
If you understand it simply, CeFi needs you to trust the intermediary (person or institution), and DeFi needs you to trust the protocol (code).
After hundreds of years of development, CeFi has mature products and good user experience, but the defect is that it is relatively closed and requires a license to use. Like many underdeveloped regions in Africa, there are still a large number of people who cannot enjoy the services provided by financial institutions such as banks.
secondary title
The development status and main representative projects of DeFi
From the perspective of market value, the current total market value of DeFi projects has exceeded 7.4 billion US dollars, and the scale of locked encrypted assets has exceeded 2.08 billion US dollars, showing a blowout development. It can be said that DeFi has become a force that cannot be underestimated in the blockchain industry.
image description
Figure: DeFi user growth, source: Dune Analytics
DeFi was born after the emergence of the programmable Ethereum blockchain. In terms of distribution, most DeFi projects are currently concentrated on the Ethereum blockchain, followed by public chains such as EOS and TRON.
From the perspective of product form, the current DeFi already includes decentralized wallets, KYC and identity authentication, decentralized trading platforms, decentralized lending, staking, stable coins and other infrastructure, and the entire ecology is constantly improving.
image description
Below, we introduce several representative DeFi products:
Compound is a decentralized lending platform on Ethereum. With the Token distribution principle of "borrowing is mining", it has attracted a large number of investors to use it for mortgage and lending in just a few weeks.
As of now, the number of Compound users has exceeded 30,000, the total amount of encrypted assets available for lending has exceeded 1.57 billion US dollars, and the loaned encrypted assets are nearly 900 million US dollars. It is the DeFi with the highest total loan amount among decentralized lending platforms . The top three encrypted assets that are mortgaged and lent the most on Compound are DAI, USDC, and ETH, and the first two are stablecoins anchored 1:1 with the US dollar.
image description
Figure: Borrowing data on Compound, source: Compound official website
image description
Figure: Composition of total loans of DeFi projects, source: DeBank
2. Stable currency leverage: MakerDAO
MakerDAO is an old-fashioned decentralized lending platform on the Ethereum blockchain. Its market value has long occupied the top of the DeFi rankings (recently overtaken by Compound), and its stable currency DAI has always been regarded as the biggest competitor of the centralized stable currency USDT.
According to its official website, there are currently more than 400 DApps embedded with MakerDAO, and the total value of locked encrypted assets exceeds 623 million US dollars, ranking second in the category of decentralized lending platforms (ranked first is Compound, 685 million). The mortgage assets supported by MakerDAO have changed from the previous single ETH to support multiple encrypted assets, including BAT, USDC, WBTC, TUSD, KNC, and ZRX, among which USDC, WBTC, and TUSD are all stable currency assets.
3. DeFi with the largest number of users: Uniswap
According to data from Dune Analytics, the number of Uniswap users is as high as 92,000, accounting for 38.61% of the total number of DeFi users; the Ethereum browser shows that the number of Uniswap transactions accounts for 36.971% of the number of DEX transactions on Ethereum.
4. DeFi with the most Token usage: Brave browser
Founded by Brendan Eich, the father of JavaScript, the Brave browser focuses on privacy protection, and its biggest feature is the introduction of the Token economic incentive mechanism. The native Token of the Brave browser is called BAT, which was the most used Token in DeFi in the second quarter of this year, with a transaction volume of 931 million US dollars, exceeding the sum of ETH and DAI.
The above is just the tip of the iceberg in the DeFi ecosystem, and there are many familiar applications, such as the web version of Little Fox Wallet (MetaMask), Veil, which focuses on prediction markets, StakeWith.US for staking, stable currency WBTC, infrastructure Bancor , 0x, etc. are limited by the length of the article, so I won’t introduce too much.
secondary title
DeFi's impact and future prospects
The DeFi ecology is becoming more and more prosperous, and more and more excellent projects have emerged. What impact will these projects have on our lives?
There are still many advantages of DeFi, but we cannot ignore that there are still many shortcomings in the current stage. For example, the user experience is not as good as that of traditional centralized finance. For example, the learning threshold is high, the product is not mature enough, and some hacker attacks often occur. Events (such as the recent flash loan attack on Balancer).
epilogue
In the foreseeable future, DeFi and CeFi will learn from each other, and the boundaries between the two will become more and more blurred. DeFi applications will become more and more convenient as CeFi in terms of user experience, and some of CeFi's underlying businesses will gradually be connected to the blockchain, using blockchain technology to improve the transparency and convenience of its services. For users, a product that is safe and meets their needs is a good product, regardless of whether it is CeFi or DeFi.
