DeFi is booming! New report shows: More and more Ethereum addresses use a DeFi protocol
From April to June, the number of Ethereum addresses increased by 10%, while the number of addresses using a DeFi protocol increased by 65%. This is according to the just released "ConsenSys Q2 2021" DeFi report.
DeFi is the collective term for blockchain-based protocols that exclude banks and other intermediaries from financial transactions. With DeFi, sellers can exchange tokens directly with buyers, holders can earn crypto for depositing funds, traders can borrow, and speculators can make bets on price movements.
While DeFi applications are available on a handful of networks (including Binance Smart Chain and Solana), they started on Ethereum. This is also where the lion's share of usage remains to date. According to DeFi Pulse, there are nearly $70 billion in assets tied up in the DeFi protocols.
Software development company ConsenSys comments:
"AS COMMUNITY-DRIVEN EDUCATION, SIMPLE USER INTERFACES, ATTRACTIVE RETURNS AND GENERAL AWARENESS OF DEFI BEST PRACTICES INCREASED DURING THE QUARTER, SO DID THE NUMBER OF NEW ADDRESSES."
All told, by early July, 2.91 million Ethereum addresses had interacted with DeFi protocols - such as decentralised exchange Uniswap, crypto lender Compound and liquidity fund KeeperDAO.
Enormous DeFi boom in 2021
DeFi's big surge in the first half of 2021 was fuelled by a massive increase in stablecoin supply, which stood at $65 billion in early July. This represents a 60% increase in dollar-pegged assets since 31 March. Leading the way was Tether, which accounts for almost half of all stablecoins on Ethereum. USDC is also widely used - nearly a quarter of all USDC is used in DeFi lending protocols, according to ConsenSys.
The advantage of stablecoins is that they can be bought with dollars and then exchanged for other cryptocurrencies without the need to resort to the traditional financial system. When crypto prices skyrocketed last quarter, speculators and investors were able to hold stablecoins while waiting for the right time to enter the market.
We are already over a month into the third quarter. This has not been as rosy as the second quarter during its peak. The amount of money tied up in DeFi protocols has just returned to where it was at the beginning of June. The same is true for the price of Ethereum, whose strength is correlated with network usage.
And with the Ethereum community looking ahead to the London upgrade this week (which changes the structure of transaction fees on the network), many are eager to see if this will further boost DeFi growth this quarter.