So, you want to join the cool kids on the block and learn a bit more about decentralized finance eh!?
Kudos to you, it’s probably time to do so, as this ‘new thing’ seems to be here to stay.
You’re about to see just how powerful this industry has become, and through these DeFi stats discover the behind the scenes infrastructure of your favorite NFT marketplaces, stablecoins, digital wallets, and even compliance platforms.
The decentralized finance ecosystem is growing by the day, and it seems like every month there is a new attempt at a service being decentralized. But, let’s not get ahead of ourselves, keep reading to discover more trends and stats in the decentralized world.
Note on Ethereum: You’ll hear the word Ethereum mentioned a lot when discussing DeFi. Ethereum is a decentralized global computer that is owned and operated by its users. It is powered by a fungible toke, ETH. This token is used to incentivize the physical computers that underlie the system. Decentralized Finance as we discuss it today, originated on Ethereum.
Welcome aboard! There’s a lot to cover, and we certainly won’t be able to get into it all in one short post, but after reading these DeFi statistics you’ll have a much better snapshot of what DeFi is, how to invest in it, and where the industry is at overall.
Sneak-peak of the DeFi stats ahead:
- $77 billion in gross and $59 billion in net value locked in Ethereum DeFi.
- Pancake Swap holds almost 48% of all value locked on the Binance Smart Chain.
- Almost 16% of crypto hedge funds use Uniswap.
- Axie Infinity is the highest earning DeFi application.
- DeFi users grew over 1,300% year-over-year from April 2020 to May 2021.
What is DeFi?
DeFi stands for Decentralized Finance.
Start with what you know about cryptocurrencies, Bitcoin for example — that it’s a virtual currency existing only on an online ledger (blockchain) and that it’s governed by computer code. Great.
Now, imagine that the code Bitcoin exists on isn’t solely recording transaction. Imagine that the code is also capable of running lending platforms, insurance firms, payments and entire financial markets. All with minimal human intermediation. That’s decentralized finance.
DeFi vs. Traditional Infrastructure
Here’s an illustration of the differences in infrastructure between traditional finance and DeFi:
DeFi apps generate revenue in a similar manner to traditional entities like hedge funds, commercial banks, and exchanges. However, unlike traditional firms, DeFi automates financial services via smart contracts. Thus nullifying the necessity for hiring a large number of employees (aka human capital).
In turn, DeFi applications are able to offer a larger portion of what they earn to their users. Their importance in the overall crypto market has risen significantly, as evident by the DeFi market share doubling since 2020. Additionally, government’s around the world are scrambling to catch up with this technology and figure out how to best govern such rapid innovation going forward.
Here are some additional differences between traditional finance and DeFi.
Next up we’ll go over the different DeFi sectors and some leading companies in them at present.
How to invest in DeFi?
So you’ve heard enough about Decentralized Finance to consider investing? Excellent news indeed, but you must be sure to exercise precaution, it’s still the Wild Wild West out there in the DeFi world.
Investing in DeFi can be intimidating at first, especially if you haven’t experienced anything like it before. To help you make sense of it all, here is a list of some DeFi categories and some of the more popular companies for reference.
Decentralized finance ecosystem
Here are some DeFi categories and companies to be aware of:
- Wallet & Asset Management: Tokeny, Argent, AlphaWallet, Bitpie, Cobo Wallet, Coinbase Wallet, Curv, CoinPlus, Eidoo, Enjin, imToken, InfiniteWallet, InstaDApp, Ledger, Melon, Metamask, Multis, MyCrypto, Mew, Portis, Set, Trust Wallet, Tangany, Upvest, ZenGo, etc.
- Prediction Markets: Augur, Gnosis, Polymarket, PlotX, Omen.eth.
- Lending: Aave, BlockFi, bZx, 88mph, Compound, Celsius, CoinLoan, Fulcrum, Lendingblock, linen.app, Nexo, Nuo, Oasis Borrow, Salt, Torque, alchemix, Cream Finance, Liquity, Notional, TrueFi, etc.
- Infrastructure: 0x, 0xcert, Alchemy, Blocknative, Carbon, Centrifuge, Tokeny, Chainlink, Dfuse, Fabr(x), Fortmatic, Hummingbot, Hydro, Kyber Network, Loopring, Libonomy, Melon, Polygon, Polkadot, PayTrie, Provable, QuikNode, Ramp, Ren, Set, Solana, The Graph, Torus, Totle, Transak, Lima, Uniswap, Wallet Connect, Zap.org, etc.
- Compliance & Identity: 3Box, Tokeny, Colendi, Civic, Bloom, Chainalysis, Hydro, Elliptic, Identity, Jolocom, Selfkey, Sovrin, Scorechain, U-port, etc.
- Asset Tokenization: iStox, Vertalo, Tokensoft, Tokeny, Codefi, AlphaPoint, Globacap, Polymath, Securitize, etc.
- Payments: Celer, Connext, MoonPay, Groundhog, Request, Sablier, StablePay, Whisp, Wyre, xDai, zkSync.
- Marketplaces & Liquidity: Atomex, Area2Invest, Tokeny, BlackManta, Binance, Balancer, Bancor, Bounties Network, Codefi, DDEX, DeverseFi, DEX.AG, Dex.Blue, Dodo, Dolomite, District0x, Gitcoin, Idex, Jelly Swap, KyberSwap, Liquality, Loopring, LocalCryptos, Matcha, Mesa, Oasis, OpenBazaar, OpenSea, Origin, Paraswap, Radar, SushiSwap, Tokenlon, Totle, Uniswap, etc.
- Stablecoins: Tokeny, Augmint, BUSD, Gemini, pTokens, Paxos, WBTC, Basis Cash, DAI, mUSD, rDAI, Reserve, USDx, MAI, Frax Finance, ARCX, etc.
This is by no means an exhaustive list, and in fact new DeFi apps are coming out daily. But as mentioned, when you’re navigating unchartered territory for the first time, it’s best to gravitate towards those products/services that have a proven track record and have earned their spot.
What’s the next step?
Once you’ve decided on an investment (or a speculation) the next step is to buy some tokens. There’s certainly not a shortage of places where you can buy and sell DeFi cryptocurrencies.
Places you can use to buy DeFi tokens:
- Coinbase and Coinbase Pro
Then you’ll want to install one of the many digital crypto wallets out there, my personal favorite is Trust Wallet, and send your tokens there to keep track. You can even buy crypto through some wallets.
Once you’ve got crypto in your wallet, you can go to any DeFi platform compatible with your token type, connect your wallet, and you’ll be able to use the platforms interface for transactions.
Interesting decentralized finance statistics and trends
1. DeFi crime as a percentage of overall crypto crime hit a record high in the first three quarters of 2021.
According to the crypto-intelligence firm CipherTrace, decentralized finance crimes such as losses from theft, hacks, and general fraud have hit an all-time high in the first seven months of 2021.
Decentralized Finance related hacks totaled to $361 million by July 2021, which at the time comprised three-quarters (76%) of the total hack volume for the year. Marking a 2.7x increase from 2020. Q2 2021 alone saw an addition of $329 million in losses from DeFi hacks and fraud.
Fraud related to DeFi as a percentage of the total crypto fraud volume rose sharply to 54% from just 3% in 2021. But losses from fraud in the crypto world overall decreased significantly in 2021, thus far, compared to the prior two years which explains the significant jump.
2. As of September 2021, there is $77 billion in Gross and $59 billion in Net value locked in Ethereum DeFi.
(Source: The Block)
According to The Block Crypto there is currently $77.57 billion in Gross Value Locked and $59.22 billion in Net Value Locked in the Ethereum DeFi realm. For a Total Value Locked of $136.79 billion.
The Binance Smart Chain platform had $19.65 billion in Gross Value Locked. Now, what is Value Locked you may be wondering? It’s simply an indicator that is used to measure or evaluate the adoption scale of a DeFi project.
It takes all of the ETH out there, as well as other ERC-20 tokens that are currently locked in corresponding smart contracts, and calculates their USD total. Then for the Net Value Locked figure, the assets double counted in multiple protocols are excluded.
3. The DeFi project Pancake Swap holds almost 48% of all value locked on the Binance Smart Chain.
(Source: The Block)
As mentioned above, the Total Gross Value Locked on the Binance Smart Chain at the end of September 2021 was $19.65 billion. Nearly half of that (47.9%) is attributed to a leading decentralized exchange by the awesome name of Pancake Swap.
4. Polygon grew over 8% in a single day on September 24, 2021.
(Source: The Block)
The Mumbai, India based startup Polygon (formerly Matic Network) seems to be growing in popularity lately. It’s Gross-Value-Locked Day-Over-Day growth jumped from -2.72% on September 22, 2021 to 8.05% on September 24th, and climbed even higher to 10.14% on September 29th.
5. Almost 16% of crypto hedge funds used Uniswap as of Q1 2021.
Uniswap is a DeFi protocol used to exchange crypto. Along with Curve, Maker, Aave V2, and Compound, it’s one of the most popular DeFi projects around. Just how popular is Uniswap?
According to DeFi statistics on the most used decentralized exchanges by crypto hedge funds across the globe, Uniswap takes the cake. Almost 16% of respondents reported use it, followed by 1inch at 7.9% usage among crypto hedge funds as of Q1 2021.
As of Q3 2021, Uniswap accounted for 6.77% of Total Gross Value Locked by DeFi projects.
6. Axie Infinity is the highest earning DeFi application worldwide.
(Source: Statista II)
For a prime example of how DeFi protocols continue to increasingly generate more revenue, take a look at the DeFi powered videogame Axie Infinity. Which is also the protocol behind OpenSea, a popular NFT trading platform. Check out our NFT statistics post to learn more about NFTs.
Here’s a DeFi stat worth remembering. In August 2021, Axie Infinity generated over $300 million U.S. dollars in revenue. Making over ten times more protocol revenue than in the previous month.
What does it mean to make protocol revenue?
It means the platform is essentially creating more money ‘for itself’. It’s the fees taken by the protocol that go directly to the protocol’s treasury or directly to it’s token holders. In contrast to supply-side revenue for example, which is revenue given to users of the protocol.
Top dapps and blockchains based on daily protocol revenue in the past 180 days.
7. Top DeFi Exchange Markets
If you’re looking for statistics on decentralized exchanges (DEX), here is a list of the top ones as ranked by market share percentage. A DEX is a crypto exchange that operates without a centralized authority. It takes a trusted and passive intermediary role in buyer-seller transactions.
8. Top DeFi Lending Markets
(Source: Defi Pulse)
What is DeFi lending you may be wondering? Simply put, it’s analogous to peer-to-peer lending. These platforms aim to do away with an active middleman (aka intermediary) and offer coin holders the ability to lend out their coins. Borrowers take a loan out directly on the decentralized platform.
Here’s a list of the top decentralized lending platforms by total value locked as listed by DeFi Pulse:
9. Decentralized Finance total value locked (USD) grew by over 260% between October 2020 and October 2021.
(Source: DeFi Pulse)
At the beginning of October 2020 the total value locked (TLV) in DeFi was at $20.2 billion in U.S. dollar figures. As of October 1st 2021, the TLV was at $73.2 billion, a 262% increase!
Furthermore, if we zoom out a bit and travel back into the not so distant past, 2017, we find the DeFi TLV figure to be just over $100 million at years end. With this DeFi stat you can see just how revolutionary this industry truly is. And if not, consider that in August 2017, the LTV was just $4!
10. The money market DeFi platform Compound was the first to break $10 billion in Total Value Locked in April of 2021
(Source: CoinDesk, DeFi Pulse)
You’ve just learned about the exponential DeFi market growth in the statistic above, as measured by the total value locked. In just a handful of years, the TLV skyrocketed to over $70 billion. .
Along the way a DeFi platform by the name of Compound Labs became the first to break $10 billion in TLV. By offering an algorithmic and autonomous interest rate protocol for developers.
Marketed as the most secure protocol for money and backed by world class investors, at the start of October 2021 their platform had over $15 billion in assets earning interest across 16 markets.
11. As of September 26, 2021 the highest DAI APR rate is 13.26% and the highest USDC APR rate is 8.88%
(Source: DeFi Rate)
DAI is the leading permissionless stablecoin within the DeFi ecosystem issued by MakerDAO. You receive Dai by putting your ETH up as collateral. By utilizing protocols such as Maker, Compound, Aave, dydx and others, users from all over the world can earn interest by lending their capital without getting permission from a third party.
In the past couple of years the DeFi world saw a significant amount of activity in the lending and borrowing space. Crypto holders saw and capitalized upon the high-yielding passive income opportunity this realm offers. As you can see from this revealing DeFi statistic, one of the most exciting things about DeFi is the ability to take out a loan (or lend money) at any time in an entirely independent manner.
Certainly a higher interest on their money than the traditional savings account approach, which in the United States is around 0.09% APR on deposited US dollars.
12. DeFi users grew over 1,300% year-over-year from April 2020 to May 2021.
(Source: Glassnode Insights)
For evidence of the exponential growth in the decentralized finance space, look no further than this statistic on the DeFi user adoption rate. In addition to the 1,300% user growth in a matter of a year, the total value locked in smart contracts also exploded by 9,000% and DEX volume grew by 8,500%.
Furthermore this once niche sector has gone from obscure to trading over $2 billion dollars in volume a day on the decentralized exchanges with over 2 million users with unique addresses.
13. Speaking on ‘Crypto and DeFi’, OCC head warned that “innovation for innovation’s sake risks creating a mountain of fool’s good.”
(Source: Coin Telegraph I)
Michael Hsu, the acting head of the United States Office of the Comptroller of the Currency (OCC), has gone on record warning us that as DeFi and Crypto go mainstream, the risks may be multiplied!
In his view, some of the exotic financial products developed in the virtual currency and DeFi space are reminiscent of those that permeated the atmosphere that led to the 2008 Global Financial Crisis.
To quote Hsu: “I have seen one fool’s gold rush from up close in the lead up to the 2008 financial crisis. It feels like we may be on the cusp of another with cryptocurrencies (crypto) and decentralized finance (DeFi).”
14. Bitfinex launched the first L2 bridge from CeFi to DeFi.
(Source: Coin Telegraph II)
In an effort to combine the highly liquid accessible features of centralized finance with the permissionless and privacy-centric aspects of decentralized finance, a crypto exchange by the name of Bitfinex announced a service to bridge the two realms.
Initially, the transactions will be exclusive to the stablecoin Tether (USDT), but the ultimate goal is to open up the transactions to various ERC-20 tokens in the near future.
15. A white-hat hacker allegedly identified a SushiSwap vulnerability that could place more than $1 billion worth of user funds under threat.
(Source: Coin Telegraph III)
SushiSwap is a very popular decentralized exchange on the Ethereum network, with a large selection of liquidity pools and a community-focused approach. It’s main rival is Uniswap.
Allegedly, an anonymous white-hat hacker was snooping through their smart contracts and discovered a vulnerability with SushiSwap’s emergencyWithdraw function in two of their contracts, MasterChefV2 and MiniChefV2.
However, one of the SushiSwap developers has rejected the alleged vulnerability and offered more context as to what would actually happen in his view, should the scenario the hacker paints play out. Additionally, they pointed out that the next version of MasterChef will not have this issue.
16. In September 2021, Avalanche Foundation raised $230M to support the DeFi ecosystem.
(Source: Aave – Governance)
Ever since their launch in September of 2020, The Avalanche Foundation has grown its influence in the DeFi world. In fact, it’s smart contracts platform now provides the infrastructure for over 270 DeFi projects, including the likes of SushiSwap, Circle, Chainlink, and The Graph.
Recently they announced their raising of $230 million in investments, through the private sale of its native token, from venture capital groups by the likes of Polychain and Three Arrows Capital.
They stated that the money will be allocated to a multitude of DeFi use cases on its blockchain. Some of the use cases being, grants, token purchases, and tech support as well as investments into an array of current and future projects.
17. Uquid is hoping to “build a bridge between DeFi and e-commerce,” effectively becoming an “Amazon of DeFi” online shopping platform.
If you’re not familiar with DeFi, then at first glance it may not be as apparent to you as to why or how it can be paired with ecommerce. But just think about what ecommerce was back in the 90s and early 00s. How did people buy things online from each other before PayPal came about?
Nowadays, we have a number of middlemen mediating the peer-to-peer transactions online, but that wasn’t always the case. Nevertheless, they are very important in creating trust, but what if we could use the immutable blockchain smart contracts to serve as the middleman?
What if you could just connect your wallet to a DeFi ecommerce platform and complete the transaction securely on the spot, and what’s more, what if your wallet address IS the loyalty reward program. Meaning, merchants can easily reward you without annoying salesy tactics, or without even knowing who you are! This is what Uquid is trying to accomplish, a DeFi-ecomm combo.
18. Institutional investors dominated the DeFi scene in Q2 2021
For as much talk about DeFi and crypto being about the ‘retail investor’ and the ‘little guy’, these DeFi statistics beg to differ. In fact, big money players accounted for the majority of transactions in the Q2 2021 DeFi crypto market.
Institutional investors are taking the space by storm, according to Chainalysis. In their Global DeFi Adoption Index they cite large institutional transactions (those over $10 million) accounting for over 60% of all Q2 2021 DeFi transactions. Versus their under 50% figure for all crypto transactions.
19. A small number of universities are beginning to offer DeFi courses to help students and the general public better understand the technology.
(Source: DeFi Learning)
The University of California at Berkley recently an MOOC (massively open online course) on decentralized finance for its Fall 2021 semester. The syllabus lists the first portion of the course covering an introduction to smart contracts and the blockchain.
Later lectures cover the different DeFi services, stablecoins, decentralized exchanges, DeFi lending, and other topics. Over 1,400 students have already signed up for this online course!
Berkley may be one of the pioneers, but it isn’t the only one. At the University of Wyoming, students can minor in blockchain. This DeFi stat certainly serves to show the importance society as a whole is starting to place on spreading blockchain and DeFi education.
20. These are the top Dapps and Blockchains based on cumulative protocol revenue in the past 30 days.
Note on the numbers used in the article: In an effort to paint a fuller picture, the figures in this article were aggregated from numerous credible sources, who reported the results of their surveys at various points in time.
That’s a lot to take in at once, but you can always come back for a refresher!
Hopefully you now have a better picture of the DeFi realm and these statistics give you some insights as to the biggest DeFi players in gaming, lending, exchanging, etc. One thing you’re sure to have noticed is just how much online gaming is fueling this industry.
It’s where the bread and butter of DeFi has been, but the ecosystem has grown so much more (especially in the last 5 years) and is expected to change (read: further digitize) the way we’ve traditionally transacted and interacted in the past. Heck, Facebook just changed it’s name and is prepping itself as a company for something called the ‘metaverse’ in the near future.
But, we’ll leave that for another post!
CipherTrace | The Block Crypto: Value Locked | Statista I | Statista II | CoinMarketCap | DeFi Pulse: Lending Rank | CoinDesk: DeFi Sector | DeFi Pulse: Compound | DeFi Rate | Glassnode Insights | Coin Telegraph I | Coin Telegraph II | Coin Telegraph III | Aave Governance | Uquid | Chainalysis: Global DeFi Adoption Index | DeFi Learning |