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Q3 Decentralized Finance Ecosystem Report

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DappRadar

Ethereum holds 96% of total transaction volume in the Decentralized Finance Ecosystem

2020 has been the year of Decentralized Finance. With the emergence of yield farming, the sector has gained investors’ and developers’ interest. New incentive models helped grow the industry more than 10x during Q3.

Within this overview, we will analyze transaction volumes, total value locked, daily active wallets, and earnings. Covering not only the three main dapp blockchains – Ethereum, TRON, and EOS, but also IOST, Ontology, and NEO.

N.B: The DeFi ecosystem refers to Decentralized Finance and Decentralized Exchange dapps.

Key Takeaways

  • Ethereum holds 96% of total transaction volume in the Decentralized Finance Ecosystem
  • Ethereum’s total value locked surpassed $10 billion
  • Ethereum, TRON, and EOS account for 97% of daily active wallets.
  • IOST, Ontology, and NEO joined the world of Decentralized Finance
  • The distribution of governance tokens combines with yield farming has become key to successful dapp growth.
  • Uniswap earnings have hit the roof, followed by SushiSwap and Balancer
  • Binance and other blockchains are eager to join the Decentralized Finance family.

Ethereum is leading the growth

Q3 2020 was the best quarter for the DeFi ecosystem so far. As already reported, the DeFi ecosystem transaction volume surpassed $123 billion with 96% of total belonging to Ethereum.

Transaction volumes were not the only metric that spiked. According to the DappRadar DeFi page, total value locked (TVL) surged by 380% from the end of Q2 2020 reaching $10 billion by the end of Q3 2020.

The dapps that account for the majority of the TVL are Uniswap, MakerDAO, and Curve. The growth of Uniswap was driven mostly by the introduction of the UNI governance token.

In terms of daily active wallets, Ethereum accounts for more than 57%. However, if we look over the other protocols they have made a huge impact on the DeFi ecosystem too.

EOS and TRON hold 5%, and 35% respectively. In total Ethereum, EOS, and TRON hold up to 97% of the daily active wallets.

The biggest contributors to the Ethereum protocol were Uniswap, Sushiswap, Balancer, and Compound. Together they have generated 56% of the daily active wallets.

On the EOS protocol, the biggest contributors were Defibox, Dmd.Finance and the DeFis Network. They generated more than 4,300 daily active wallets.

Whereas TRON dapps like JUST, Zethyr Finance, and Oikos.cash along with a few new projects like Sun, Unifi Protocol, and SharkTron gained popularity and generated more than 32,000 daily active wallets.

Other protocols try to join the DeFi hype

Other smaller protocols like IOST, Ontology, and NEO have followed the DeFi trend in Q3 2020. The daily active wallets of IOST, Ontology, and NEO have increased by 357%, 1,589%, and 840% respectively.

In regard to transaction volumes IOST, Ontology, and NEO are steadily increasing quarter on quarter. IOST has gathered $123 million in transaction volumes already. Ontology and NEO were way behind IOST but still, they have generated $1.6 and $12 million respectively.

The power of yield farming

It is evidential, that the delivery of new governance tokens together with yield farming created the hype that ended up generating remarkable results in Q3. Effectively assisting Ethereum in maintaining their leadership position throughout Q3 2020. 

While Synthetix was the first dapp that started the yield farming hype, the first to truly make it popular was Compound

COMP was introduced back in June and we observed transaction volumes within the DeFi ecosystem exploding. Within just half of June, Compound transaction volume grew 27x reaching $4 billion. 

Another and perhaps less memorable event was the distribution of Balancer’s BAL token. While the volumes of the dapp were continuously growing during Q3 an immediate surge was not spotted.

At the end of August, a project called Sushiswap was launched that shook the DeFi ecosystem. The project used Uniswap as a launch base, with the intention of migrating the liquidity away from Uniswap. In return giving away Sushi tokens. Within September the project generated more than $6 billion in transaction volumes.

The last and perhaps the most important protocol to discuss is Uniswap with their token UNI. On the 17th of September out of nowhere, the UNI governance token was distributed. The transaction volumes peaked momentarily. $33 billion was generated in September by Uniswap. Accounting for almost 60% of total transaction volumes.

Earnings skyrocket to $59 million

As a result, DeFi dapps have generated millions of dollars in revenue. According to tokenterminal.com, we witnessed a total of $59 million in fees generated over the last 30 days.

The biggest share of earnings went to Uniswap with $33 million. Sushiswap and Balancer received second and third place. All three dapps account for 82% of total earnings.

Ethereum contenders 

Although the results of Ethereum are astonishing, one of the main issues slowing it down is congestion. The gas prices showed impressive heights during Q3 2020. At peak moments transaction costs were more than 400 Gwei. 

With Ethereum 2.0 still being worked on, Cardano offers a viable PoS alternative for DeFi projects. Cardano is the first blockchain platform to evolve out of a scientific philosophy and takes a research-first driven approach. 

Secondly, the Polkadot (DOT) blockchain has recently joined the leading ranks by market capitalization. According to Coingecko, the blockchain token is in the top 10. The Polkadot blockchain network is optimized around interoperability, enabling you to move any type of data across any type of blockchain.

Last but not least is Binance. The company joined the DeFi race in August by launching a new futures product based on its DeFi Composite Index. Within a month, Launchpool went live. The first project to be rolled out on Launchpool is the Bella Protocol (BEL) and yield farmers can farm BEL tokens.

Launch Pool, a platform to take digital currencies and earn rewards, shows an inclination to join the decentralized finance ecosystem too.

Conclusions

In Q3 2020 record high figures were reached in all metrics within the DeFi ecosystem. Mainly generated by Ethereum protocol dapps. 

Seemingly, Ethereum became the de facto platform of choice for its various tools and projects. Compound, Balancer, SushiSwap, and Uniswap were driven by yield farming in Q3 2020. 

TRON and EOS protocols have already generated visible results too. EOS dapps account for almost 4% while TRON around 1%.

The Ethereum network congestion issue created the niche for another blockchain.  Some serious protocols are showing an increased interest in DeFi. One of the most notable is Binance.

It is still early to say how the DeFi ecosystem will evolve going forward but we definitely will monitor the space. Make sure you bookmark DappRadar.com and sign up to our newsletter below to get updates directly to your inbox.

Looking forward

Recently DappRadar listed Binance decentralized exchange dapps. Similarly to Ethereum DEX, the majority of dapps operate on liquidity pools and allow yield farming. One of the most popular dapps PancakeSwap generates around 3,600 daily active wallets.

Source: DappRadar
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