Statistics from blockchain analytics company Dune Analytics show that the decentralized finance (DeFi) sector reached 1 million users on December 4. Combined with a new all-time high at $14.8 billion, the market seems stronger than ever and remains stable despite the exponential growth achieved in 2020.
Dune Analytics co-founder Richard Chen shared a tweet last night indicating that the DeFi community has reached 1 million users. A graphical representation of the data shows that DeFi is growing exponentially, practically doubling since September 19.
According to Chen, he was anticipating DeFi to reach one million users by March 2021 when he first started working on the dashboard. However, significant interest in yield farming has accelerated the sector’s growth.
The developer also notes that as the data is based on addresses, there might be fewer than one million users at the time. A majority of the community may only use one wallet when interacting with DeFi but there is still a large portion of users who operate through multiple wallets.
Therefore, the statistics may not be as valid. Nevertheless, the current rate of growth shows that the market is stronger than ever.
Users have locked $14.8B in crypto assets
Similar to Dune Analytics, market data aggregator DeFi Pulse reveals that the market is bullish as well. On December 4, decentralized finance reached a new ATH at $14.8 billion in collateralized assets. On the official leaderboard, we see Maker, WBTC, and Compound leading the race. Maker currently dominates the market with 18.69% dominance and $2.71 billion in locked assets.
As of November 17, Uniswap is no longer the King of DeFi and has lost its top 3 position. Ranked at fifth place, Uniswap hosts only $1.32 billion in collateral, which is more than a 50% fall compared to its ATH of $3.01 billion.
As the market has evolved, it is noticeable that users have shifted their focus towards other projects. For example, SushiSwap is beginning to grow swiftly as it attracts the liquidity lost from Uniswap. The DEX has also partnered with Yearn Finance recently, which had a positive impact on SushiSwap’s reputation.
Bancor is also gaining traction as a result of the recent liquidity mining program. Since the program’s release on November 16, the liquidity protocol has increased by almost 5 times. Specifically, the collateral hosted by Bancor has gone from $19.6 million to $89 million.
What is the future of DeFi?
We can only anticipate what is coming next as DeFi continuously grows through each day. Despite major uncertainty regarding the market, with investors fearing that it has overextended, DeFi still remains more stable than ever. In the last 90 days alone users have almost doubled the sector’s value, increasing from $8.57 billion to $14.8 billion.
Since August this year, we have seen a major change in who dominates the market and which projects retained their relevance. Bitcoin wrapping protocols such as WBTC and Ren have drastically increased in size over the past couple of months as BTC whales become interested in joining DeFi.
Despite bringing forth many new features and partnerships, Yearn Finance has lost a majority of its liquidity lately. Uniswap currently goes through the same experience. However, some projects such as Aave and Synthetix have regained their past market performance.
As we can see, the position of each project changes every month. While some winners focus on liquidity and thus increase their size, other teams are working more on features and less on marketing. But whatever the performance of these projects may be, we still see that the overall market strives towards a positive outcome.
As DeFi has shown that it can provide consistent growth despite all negative events and uncertainties, it is highly possible that the market will continue its rise. But then again, Bitcoin may prove itself as a worthy opponent in this case. If the king of all cryptocurrencies has topped out, a bearish cycle may stop DeFi altogether.