March gains in DeFi and more broadly the crypto market were short-lived as most of it was given back in April. Since last November, the downward trend in performance continued for the risky assets as the market continued to encounter macro-headwinds including high inflation and rising real yields.

Year-to-date performance for DeFi underperform crypto-beta (represented by ETH and BTC) and is down 47% while ETH and BTC performed better at -24% and -18%, respectively.  Ethereum underperformed Bitcoin possibly due to the recent news that the transition to proof-of-stake will be delayed until later this year. Meanwhile, Bitcoin has been demonstrating less volatility relative to other sectors in the crypto market.

Source: CoinGecko

As of April, the DeFi market cap (top 100 DeFi coins by Market Capitalization) also slumped back down this year from its March highs [of approximately $150 billion] to $106 billion.

The average 20 day growth rate for DeFi wallets has significantly slowed down and sits at around 1% as of April month-end. In comparison, the growth rate was around 4% last November when Ethereum’s price reached a peak of around ~$4,700. Cumulatively, the total number of DeFi wallets sits at around 4.7 million today.  Although users may have multiple wallets or addresses, this data point serves as a worthy pulse on the overall health of the DeFi ecosystem.

The total value locked (TVL) in smart contracts across top blockchain platforms was $178 billion as of April month-end, down -9.6% MoM.  The value locked across all the top chains were down except for Terra which was up slightly at 2.1%.  Terra also continued to gain more share of TVL (16%) across top blockchain platforms and is the second largest after Ethereum.   Similar to prior month, the largest detractor in total value locked was Fantom at -32.6%. Despite TVL being down 11% for Ethereum, it continues to be the dominant smart platform (63%). Overall, these metrics suggest the DeFi ecosystem continues to be bearish on fears of Fed tightening and macro-headwinds.

Monthly revenue generated by popular DeFi protocols continued to decline (-3.6%) as usage slowed across major DeFi protocols.  The total monthly revenue as of April month-end was $159 million.  Meanwhile, cumulative DeFi revenue has remained flat at around $4.4 billion.

The total value of deposits for the three largest lending protocols (Aave, Compound and Maker) at the end of April was $30.1 billion (-7% MoM) while the total value of borrowing was $16.6 billion (flat MoM).  When decomposing month over month changes, Aave was the only lending protocol where deposits (+2%) were up. Loans were also up for Aave (+10%) and Compound (+19%) while the others continued to decline. 

Source: Dune Analytics

DEX activity continued to slow down with total trade volume for the month of April staying relatively flat from prior month at around $86 billion.  Recent months volume continues to print more growth relative to prior year though less overtime. 

There doesn’t seem to be any indication of short-term factors that could reverse the bearish trend for crypto markets.  However, we do know that crypto is becoming a recognized global financial asset as sovereign nations and traditional institutions adopt DeFi products and bring liquidity on-chain. The latest example is Jane Street Capital, a large market maker, borrowing up to $25 million in the stablecoin USDC through a DeFi Protocol (Clearpool) offering permissionless pools.  Increasing activity and interest in the DeFi market is a testament that millions of people, institutions and sovereign nations, are planning to participate in a new economic system that is powered by code—one that sets new standards for financial access, opportunity and trust. 

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