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Polygon DeFi Takes a Tumble

Posted by
Ian Kane

4 of the top 5 DeFi protocols record active user slumps

The Polygon network’s DeFi dapps have been riding high this year on the back of increased awareness and a rush of new blood into the space. However, since the price of BTC and most tokens dropped just over a week ago the network’s DeFi dapps have been suffering. At the time of writing the total value locked (TVL) in Polygon DeFi has dropped from a high of $6.7 billion in mid-June 2021 to just over $3 billion today. 

Polygon TVL

Looking at the performance of the network’s top DeFi dapps in regards to the numbers of unique active wallets interacting with their smart contracts we see drops across the board. Except for the 1inch network, which has seen a 7.45% rise in users in the last 7 days. Sushi, which has been performing very well of late, has seen an almost 40% drop in users week over week. Whilst relative newcomer Quokka Finance has experienced a similar drop. Aave and WaultSwap have also both been affected with 18% and 27% week over week drops in users respectively.   

Dipping prices 

The last noticeable drop for BTC was on Tuesday 7th September, a week ago. When the price decreased from around $52k to around $45k by the 8th of September. As always we observed the majority of the market follow suit. Including Polygon, which usually bucks the trend as we normally see traders rush to Polygon dapps to make fast and cheap transactions amidst price dumps. This time, however, the price started to fall on the 7th, from $1.66 to where it rests currently at around $1.25 at the time of writing. 

1Inch stands out

1inch is a leading Ethereum DeFi dapp that launched on Polygon a few months ago in pursuit of increased market share and users. While interestingly, also launching on BSC around the same time. A tactic that certainly has been working for them. Whilst the other Polygon DeFi dapps were suffering, 1inch, a decentralized exchange aggregator, registered a 7.4% lift in active users. That brought over $14 million in volume into the platform. 

Looking at their all-time user data it’s pretty clear the platform has been steadily building and to some degree has found a level of consistency on Polygon. It being a DEX aggregator, that sources the best prices from across other exchanges is also a very handy feature for traders. 

Increased competition 

As mentioned, the Polygon Network has been riding high all year. Arguably with only Binance Smart Chain and Ethereum providing real competition in the DeFi space. Now, however, there are a plethora of blockchains vying for eyeballs and users. Chains such as Solana, NEAR, Avalanche, and Tezos have stepped into the frame with small, yet refined DeFi offers. Most importantly, offering traders super-fast transactions and near-zero fees. As education around using alternative chains has grown, so has their usage.

For example, on Avalanche we see real growth right now. An almost opposite image to the Polygon dapps. With the Pangolin Exchange and newcomer Trader Joe performing at similar levels to top Polygon DeFi dapps over the last 7 days. It’s fair to say there might be a couple of new dapps and associated tokens in the DeFi space to start paying attention to.   

DappRadar users looking to invest in DeFi protocols have a plethora of options available. PancakeSwap, Uniswap, and QuickSwap each have governance tokens, CAKE, UNI, and QUICK respectively. Furthermore, every alternative also has its own tokens, from ApeSwap’s BANANA tokens to the SUSHI token for the different SushiSwap platforms. Token holders can find their holdings in the DappRadar Portfolio, allowing them to directly swap tokens straight from their portfolio. 

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The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in ETH, BTC, ADA, MATIC, SAFEMOON, HEX, LINK, GRT, CRO, OMI, USDT, SOL, SHIBA INU, AVASTR, RAY, BOSON, AND OCEAN.

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