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.
To learn more: https://pages.consensys.net/defi-and-web3-for-organizations-insight-report-feb-2022
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