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DeFi Users Stick with Polygon Despite Lower Ethereum Gas Fees

Posted by
Ian Kane

Polygon DeFi Faces Unstoppable Growth

A trend is emerging in decentralized finance. One where users are showing loyalty to finance applications running on the Polygon network over competing networks such as Ethereum and BSC. In the last 7 days, the top 10 DeFi dapps on Ethereum have attracted over 100,000 unique active wallets. Meanwhile, the top 10 Polygon DeFi apps attracted just over 242,000, or well over double. 

Ethereum’s woes have turned into Polygon’s wins lately as the sidechain has experienced record growth amidst high gas fees. Now, as gas fees start to return to normality many expected investors to flood back to Ethereum dapps – instead we see Polygon DeFi experiencing record growth. Moreover, users have almost been forced to experience DeFi on another network as Ethereum dapps became almost unusable for the average investor. Seemingly the lure of cheaper fees, high introductory returns, and a deluge of competing DeFi apps have created a perfect situation. As users look to leverage their crypto holdings during a market downturn. 

One decentralized exchange feeling a positive effect is PolyDEX. At the time of writing the platform’s total value locked stands just shy of $7 million across all farms and pools. In the last 7 days, the DeFi app has attracted 5,360 active wallets, an increase of over 380% week on week. Those wallets drove over 54,000 transactions generating over $3.3 million. Interestingly an average transaction on PolyDEX is around $60. 

The main cause of the surge has been the release of the platform’s second IDO or initial DEX offering – Safe Dollar and its token SDS on the 14th of June. Safe Dollar is an algorithmic stablecoin project on Polygon. The likes of which have been made more famous recently by exploits leading to the fall of TITAN and IRON. The IDO represents a way for hungry investors to get into the project at the ground level and purchase SDS before the platform’s official launch. Initial offerings are becoming a popular way for new projects to raise funds and we are seeing similar initiatives on several DeFi dapps.     

Another finance application on Polygon reaping the rewards is Adamant. Adamant is a yield optimizer vault that consists of many farmers pooling their time and resources to collectively earn the best DeFi yields. Adamant currently has over 100 vaults for Quickswap, Sushiswap, and other leading platforms on the Polygon network. Its current TVL stands at over $300 million. Simply put, users deposit liquidity provider (LP) tokens to Adamant’s vault contracts, which are then automatically compounded as often as hundreds of times each day into more LP tokens. Saving the users countless hours and generating the most efficient returns. 

In the last 7 days, Adamant attracted over 6,800 active wallets which represents a 97% increase week over week. Those active wallets generated over 96,000 transactions bringing almost $30 million in value to Adamant.  

The main driver of the activity over the last week has been the integration of a new Wault Finance vault offering the WEXpoly/WMATIC and the WEXpol /USDC pairs and some juicy, and most importantly, auto compounded returns. 

DeFi on Polygon builds a fanbase

The Polygon DeFi category on DappRadar has been receiving a lot of attention lately as several dapps quickly rose to prominence and continue to innovate in the sector. Arguably, one of the main driving forces behind that movement has been high gas fees on Ethereum dapps. The other was simply the sheer volume of new dapps arriving to entice users. Another, perhaps lesser reason is that for the first time, users were given the impetus to operate outside Ethereum. It appears they liked what they found. 

Of the 172 dapps now listed on DappRadar 104 are DeFi and Exchange applications. Clearly, the intention of the Polygon network is to build a strong community around itself in the anticipation it will soon need to fight harder for relevance. Interestingly, it appears this movement toward Ethereum alternatives is continuing despite lower fees on Ethereum DEX. We have even observed growth in Polygon’s gaming category as the good vibes seem to be spilling out across different applications. For games, similar to DeFi, it makes sense to offer users low-cost transactions. 

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