Almost a year and a half after the start of the bear market, how is the decentralized finance (DeFi) sector doing? Let’s take a look at some notable statistics about the health of the industry.
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Decentralized finance facing the bear market
Like many assets since the November 2021 highs, decentralized finance (DeFi) has also been hit hard by the bear market. And for good reason, the total value locked (TVL) on the different blockchains is down about 73% over the period studied.
To estimate this, we referred to data from DefiLlama, which shows that TVL stood at $180 billion at its all-time high versus $48.8 billion at the time of writing:
Figure 1 — Evolution of TVL on DeFi
The last low was reached on January 1, with 38.67 billion dollars, thus showing an increase of just over 25% in recent months for the sector.
Unsurprisingly, the Ethereum (ETH) blockchain is leading the charge, with a TVL of $28.71 billion to date compared to 109.67 billion during the November 9, 2021 ATH.
However, the data put forward by DefiLlama do not include some default values. This is for example the case of double counting, namely when a user deposits funds on a protocol A, recovers an LP-token which he will then deposit on a protocol B.
If for example the initial deposit was $1000, then double counting would count $2000 in reference to actions on both protocols, which is irrelevant.
However, it may be interesting to integrate certain data such as liquid staking, for example with Lido, as well as the various governance token repositories. With these parameters, the TVL thus passes at over $231 billion during the DeFi ATH vs. 75.71 today. A fall which therefore remains substantially similar in terms of percentages.
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Statistics from the user’s point of view
By zooming in on this data to focus on protocols, the podium is occupied by Lido, MakerDAO and Aave. The top10 shows that the first protocol having nothing to do with an environment compatible with the Ethereum Virtual Machine (EVM) is JustLend from the Tron ecosystem, in 7th position with 3.62 billion dollars:
Figure 2 — Top10 largest DeFi protocols
Moreover, it would be easy to say that the fall of TVL comes from the fact that people have fled DeFi. While there have indeed been withdrawals, the reality is more subtle. And for good reason, if the price of ETH decreases for example, this mechanically decreases the locked value on all DeFi protocols.
In fact, according to a query by Richard Chen on Dune, the number of monthly active users has dropped by around 50% since November 2021. from 972,000 to 492,000. On the other hand, it will be interesting to note that this user ATH would have been reached in May 2021 with nearly 1.09 million active addresses:
Figure 2 — Monthly active users in DeFi
In addition, the bottom of the activity would have been reached in June 2022, and since seems to be going up little by little.
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Sources: DefiLlama, Dune
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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