Behind the red candle, there are bigger things happening
Even though the crypto markets were looking like somebody used a full year’s supply of dye to paint the biggest red candle in the world, the canvas is still green underneath, you just have to take a step back and zoom out a bit. You wouldn’t use a magnifying glass when trying to admire a painting.
Crypto markets are alive, well and buzzing with activity. The community is vibrant, and the adoption and usage of different protocols is in such an uptrend it can only be rivalled by the tweet storms on Crypto Twitter (CT) during times of extreme volatility.
In short – it’s booming.
Today we will dive a bit into the DeFi space, a part of crypto for which we are constantly expanding our support: in the last few months, we’ve listed a number of DeFi-focused assets with unique use cases (click here to check out our YFI, CRV, UNI, SNX, MKR, AAVE, KNC and ZRX trading pairs).
First, let’s take a general overview of the DeFi market. Below, you can observe an ever-growing number of users, with the trend not showing any signs of stopping.
There are now more than 2.5M unique addresses taking part in the great adventure of discovering all the building blocks of decentralized finance. As this space is rapidly expanding, it’s no surprise the hyper-growth has become the norm here.
Sometimes, when exploring the unknown (and with a little bit of magic), you may find a unicorn. Which brings us to the decentralized exchange (DEX) with the highest trading volume, Uniswap.
For the past 90 days, not only has Uniswap’s trading volume been pretty constant, it’s ever so slightly increasing, telling us a story of strong demand.
The charts for Kyber and 0x below paint a similar picture.
Kyber Network (KNC)
It’s quite clear Uniswap and Sushiswap are in their own league (as far as volume is concerned) but the other two tokens are not doing bad either, filling their own niches in the market. And, don’t forget, you can buy a governance token of Uniswap, Kyber Network and 0x at Bitstamp – check UNI, KNC and ZRX trading pairs here!
Another innovation that came out of DeFi are the protocols for decentralized lending, borrowing and investing. Some of the biggest players here are Aave, MakerDAO, Yearn.finance and Curve – all with their native tokens you can also buy at Bitstamp (trade AAVE, MKR, YFI and CRV here).
One of the key metrics used to gauge lending protocols is Total Value Locked (TVL) – the value of all assets locked in a lending protocol’s smart contracts.
At its peak, the TVL of the top protocols reached around $50 billion, a result of hyper-growth of TVL in the last 180 days. Of course, given the current market condition, this value has come down a bit, but, as mentioned, it’s good to zoom out and look at bigger picture. Protocols are constantly updating their offers and introducing new collateral options, which results in the growth of TVL, all driven by demand of their users. And there cannot be growth without adoption.
Where is the biggest value locked? First, meet Aave.
This is the kind of chart that just speaks for itself. Aave TVL and borrowing volumes were steady and growing slightly over time, but then exploded in the last 2 months, showing a clear appetite of the users to put their assets to more use. Another great example is MakerDAO.
MakerDAO has been showing steady growth over the last 90 days, reaching around $15B at its peak.
The last two under our spotlight are Yearn.finance, the brainchild of Andre Cronje, a DeFi service that helps non-technical users maximize their returns from yield farming, and Curve, created by Michael Egorov (who also founded NuCypher), a DEX for stablecoin trading and earning liquidity fees. Both of them boast a significant TVL, as high as $12B combined.
One thing worth mentioning here is that, between the two, Yearn.finance has a more stable TVL growth – perhaps because it’s more user-friendly, which makes it perfect for DeFi beginners. With Yearn.finance, you just have to deposit your assets and you’re all set to start gathering rewards, while Curve requires more experience and management when it comes to claiming your rewards.
What does all this data tell us? – There is clear, constant and stable demand for DeFi products from various protocols. With more users becoming familiar with them, the adoption rate (expressed in the growth of TVL) is increasing too. In times of extreme price movements, it’s easy be overwhelmed by the fear of losing your funds, so it’s important to stay level-headed, rather than act in panic. There is a bigger picture, and while at times everything may look red, if we just take a step back, things start to look much better already.
At Bitstamp, we continue to further explore and support the growing DeFi ecosystem. In the last couple of months, we’ve listed eight new DeFi assets, including AAVE, MKR, UNI, YFI, SNX, CRV, KNC and ZRX. Check them out here, and remember, every new asset at Bitstamp trades with zero fees for three months after listing!