2020 DeFi Flash Report
2020 has proven to be a critical year for the Ethereum and DeFi ecosystem and we have already witnessed a few important waves of activity.
The first one before the Black Thursday events back in Mid-March. And the most recent one being the trading spikes caused by governance tokens. Governance tokens together with yield farming created a new hype cycle for DeFi and Ethereum itself.
DappRadar already covered the activity spikes of Compound extensively. As always, it is important to have a look at the other top dapps in the category. Within this review, we will investigate the activity trends of 1inch, Synthetix, and Aave and how each dapp is affecting the DeFi ecosystem.
- 1inch is currently the number one dapp in the DeFi category by daily active wallets.
- Synthetix daily active wallets grew by more than 100% this year with stable month-on-month growth resulting in Synthetix currently being second in the category.
- The SNX token grew by 170% in 2020. with an all-time high in July of more than $3.80.
- The biggest percentage of growth is held by lending protocol Aave. Aave’s daily active wallets increased by 1,886% in 2020.
- The LEND token increased by 1,651% in 2020 with an all-time high in July of more than $0.3.
DeFi is the most important category on Ethereum
It’s been a tremendous journey for DeFi over the last couple of months with more than $16 billion of transaction volume generated in the category.
Daily active wallet numbers also seem to be averaging around 4,500 daily for a couple of months now. The data confirms DeFi to be the most vital category for the Ethereum blockchain.
1inch is the number one dapp in DeFi right now
1inch came into existence on the 19th of May 2019 and is another interesting dapp in the DeFi category as it offers a DEX aggregator that claims to provide the best price on the market.
The dapps smart contract is built in such a way that it achieves the best rates by splitting the orders among multiple DEX’s in one single transaction. As per DappRadar’s data at the time of writing 1inch stands as the number one dapp in the DeFi category.
There are a couple of reasons for such tremendous growth. First of all, due to the simplicity and user-friendly UX of the application. Secondly and most importantly, 1inch provided a solution to save on gas prices due to the way the programmed logic within the Chi token operates.
1inch daily active wallets increased by 833%
A while ago we reported that 1inch growth is mostly driven by high Ethereum gas prices. As this price doesn’t seem to be decreasing anytime soon, we can expect daily activity to grow even more. To date, 1Inch daily active wallets have surged by 833% i.e they grew from 115 wallets to 1,073 wallets in 2020.
1inch transaction volume increased by 1,338%
1inch has clearly outperformed in 2020 with regards to transaction volume. The volume generated in January 2020 was around $27 million. Whereas volume in July 2020 to date is $396 million which clearly indicates that growth has been staggering – up 1,338%.
The transaction volume of 1inch in July 2020 has already surpassed the volume of Q2 2020 by generating $396 million. The reason behind such growth is Chi GasToken. The token influenced the increase in transaction volume since the time of its release.
Chi Gas token increased its value by 44%
Unlike other DeFi projects, 1inch includes a token which is used as a gas token. The token is called Chi and was listed in the month of June 2020.
1inch states that the token will be a next-generation gas token. Users can mint their Chi tokens on Ethereum or on the Chi minter on 1inch itself and the Chi token can also be traded on 1inch.
In the span of just forty-seven days, the Chi token has witnessed a lot of fluctuation in its value. The listing price of Chi token was $0.12 cents. Today it has increased by 44% and has a worth of $0.18 cents.
Synthetix plays a vital role in the DeFi ecosystem
Synthetix is a decentralized synthetic asset issuance protocol built on Ethereum. Born as stablecoin project Havven, Synthetix rebranded and expanded its scope prior to launching on mainnet in February 2019.
The protocol allows users to mint, hold and trade a diverse range of derivatives including FIAT currencies, commodities, and stocks, as well as options for cryptocurrencies and indexes. With Synthetix, users are able to gain both long and short exposure to all assets on the platform.
Synthetix plays an important role in the DeFi ecosystem. First of all, the protocol assists in providing access to traditional financial assets. Secondly, the more sophisticated trading strategies available here can and are being applied in the distributed finance world too.
Synthetix daily active wallets grew by 103% in 2020
It is no surprise the Synthetix protocol holds second place in the DeFi category right now. At the beginning of 2020, the protocol held 360 users, while now it has surpassed 1,000. It doesn’t seem the growth will stop anytime soon. This is due to a couple of reasons.
First of all, Synthetix is another protocol that participates in yield farming. Back in June, Synthetix, Curve, and Ren announced their collaboration as they launched a new incentivized pool to provide liquidity for tokenized BTC on Ethereum.
Secondly, the protocol announced the launch of a new decentralized asset management protocol called dHedge. dHedge offers non-custodial mimetic trading for synthetic assets, using the zero-slippage and infinite liquidity trading model of Synthetix. It is planned to be released on the Ethereum mainnet this September.
Total value locked surpassed $430 million recently
The positive development could be spotted in total value locked too.
According to DeFi Pulse, total value locked grew almost 3 times reaching more than $430 million to date. The growth was driven by both, SNX value increase and also an overall increase in user interest in the DeFi ecosystem itself.
SNX value increased by 170% in 2020
SNX holders can stake SNX by using a dapp called Mintr. In return, those staking receive fees from the Synthetix exchange and rewards from the system’s inflationary monetary policy. To create a new Synth, more than 750% of the value of the Synth must be staked as SNX.
The more SNX staked and locked as collateral, the less is available in the market and the more valuable the token becomes. The proof is in the price. The SNX token made a dramatic rise from $1.23 at the start of the year to over $3.32 on the 20th of July 2020.
The market cap is also surging. According to Coinmarketcap, market capitalization increased by 80%. From $190 million at the beginning of 2020 to $343 million now.
Aave is one of the biggest lending protocols
Aave was rebranded in January 2020 from a decentralized application called ETHLend. As per DappRadar’s data, Aave holds the fourth position in DeFi. The dapp is completely open-source which allows anyone to interact with the smart contracts based on the Ethereum Protocol.
Aave states itself as a decentralized non-custodial money market protocol where users can participate as depositors or borrowers. The platform has two types of fees:
- From borrowers, 0.01% of the loan amount is collected on loan origination.
- From Flash Loans, 0.09% is collected from the loan amount.
Along with these two fees, there are transaction fees for Ethereum Blockchain usage and this depends on the network status and transaction complexity.
Aave’s daily active wallets increased by 1,886% in 2020
It’s remarkable to witness the growth of Aave in the field of the DeFi ecosystem. The daily active unique wallets have been witnessing a day by day increase since the time of Aave’s rebranding. The number of daily active wallets has increased from 35 to 695 which is 1,886% growth.
We can expect the lending protocol to grow even more. There are a couple of reasons. Aave is actively adding additional assets and recently added two assets – ENJ and renBTC. By adding ENJ tokens they have initiated their interest in gaming and NFT’s whereas renBTC has been added due to its amazing delivery, active and consistent community.
Additionally, Aave recently raised $3 million for future development. This once again proves DeFi to be the most exciting category not only for users but investors too.
The total value locked exceeds $500 million.
Aave has grown amazingly in terms of total value locked. According to DeFi Pulse, the total value as of today has exceeded more than $500 million which is an all-time high value.
LEND token value increased by 1,651% in 2020
Aave’s official token is called LEND. The LEND token is burnt based on the fees gathered in the protocol, so holders benefit from the reduction of the supply. LEND tokens will be used to govern the protocol and the Aave team is currently working on this implementation and will be soon launching the governance model.
The LEND token has made an increase in its value from $0.10 cents to $0.31 cents along with the increase of market capital. The most recent increase of the token value might have been caused by the announcement of funding closed as mentioned previously. Framework Ventures and Three Arrows Capital have invested $3M in Aave development.
To conclude, we witness huge spikes within daily active wallets, transaction volumes, total value locked, and native tokens. This gives us an understanding that a few top dapps help in creating tremendous value for DeFi and Ethereum itself.
1inch is the DEX aggregator that ensures the best prices for the swap. In light of the high Ethereum gas prices, the solutions that help to decrease the price of swaps is vital. This is how the dapp finds itself in the most used position now.
Synthetix plays an important role in the DeFi ecosystem too. First of all, the protocol assists in providing access to traditional financial assets. Secondly, the more sophisticated trading strategies could be applied in the blockchain world too. Finally, the protocol tends to be fast to react to the DeFi ecosystems trends.
Aave is the second most used lending protocol on DeFi now and holds the fourth position in the DeFi category. The recent announcement of investment suggests the dapp will be developed even more in the future. We expect it to have a positive effect on the dapp performance too.