The hype at the moment may be centered around non-fungible tokens (NFT), but DeFi has been quietly building and growing in the first three months of 2021.
An April 1 report by The Defiant has analyzed some of the metrics for the industry including total value locked, decentralized exchange volumes, and stablecoin minting.
The findings show that things have been very bullish for the fledgling financial ecosystem despite NFTs taking the limelight.
DeFi’s Stellar Q1
Starting with TVL, the report revealed that deposits in Ethereum-based DeFi protocols more than doubled from $16.6 billion at the start of the year to $37.7 billion. This trounces the fourth quarter of 2020 by 90%. The figures came from crypto wallet provider DeBank.
DappRadar reports an even larger increase of 145% from $22 billion to $54 billion for Q1, 2021. DeFi Pulse is reporting a gain of 175% for the three-month period with TVL surging from $16 billion to $44 billion.
It did point out that due to the dominance of Ethereum in DeFi, roughly half of this TVL surge can be attributed to the price increases of ETH, which is now being labeled as “ultra-sound money.” In the same period, ETH prices have surged almost 150%.
Binance Smart Chain (BSC) has also had a breakout quarter with TVL jumping more than 34 times to $8 billion by March 31, it added.
DEX Volumes Doubled
DEX daily volumes have also doubled during the period, averaging over $2 billion in Q1 2021 compared with sub $1 billion averages in Q4 of 2020 according to DeBank.
It attributed a chunk of this to a rise in usage of BSC;
“As with TVL, DEX volume has been bolstered by BSC’s rise. The chain had never facilitated more than $300K of trading prior to 2021, but now appears to be on track to average over $1B in volume after hitting a high of $1.9B on Mar. 24,”
The research revealed that stablecoins also doubled in the first quarter of 2021, jumping roughly 100% from $21 billion worth at the start to over $42 billion at the end of the period.
Borrowing volume across DeFi platforms surged by more than 3.5 times from $3.9 billion to $13 billion it noted. Compound Finance accounted for 55% of the market, while MakerDAO accounted for almost 30%.