August DeFi Review: Can the new public chain spend huge sums of money to promote the increase of DeFi data in the multi-chain ecological arms race?

After more than a year of rapid development, DeFi has made a qualitative leap in product, capital, and user scale. Even after the heavy market hit in May, as the market picks up and public chains have successively introduced token incentive policies, the total value locked in the DeFi protocols of various public chains has also rebounded rapidly, and most of the ecology in public chains is in Refresh history records faster than expected. 

The improvement and differentiation of multi-chain ecology

The ecological incentive arms race at the public chain level has begun. In April of this year, Polygon launched the $100 million DeFi fund “DeFi For All Fund”, which will provide support for DeFi projects in the next two to three years to improve DeFi adoption, accessibility, and cost-effectiveness; in July, Terra announced Launched a US$150 million ecological fund to support applications in the Terra ecosystem and improve the accessibility of the Terra DeFi ecosystem; in August, the Avalanche Foundation announced that it would launch a US$180 million liquidity mining reward program, Avalanche Rush, to encourage more Applications and assets join the Avalanche DeFi ecosystem; in the same month, Fantom issued a total of 370 million FTM rewards for TVL projects over 5 million U.S. dollars. In addition, Celo also announced in August that it will jointly launch a $100 million “DeFi for the People” project with Aave and Curve, which aims to realize the use of DeFi on the mobile side.

After the announcement of liquidity mining incentives in August, Avalanche has become the fastest growing public chain in ecology. That month, the lock-up volume in Avalanche rose from US$184 million to US$2.07 billion, an increase of more than ten times. Among them, the loan agreement BENQI, the current locked position has reached 1.2 billion U.S. dollars, and the governance token QI has risen from around 0.5 U.S. dollars on August 19 to as high as 4 U.S. dollars.

According to data from Defi Llama, as of September 1, DeFi’s total lock-up volume (TVL) has reached 161.2 billion US dollars, a record high. Compared with the same period last year, the total lock-up volume of DeFi has increased by more than 19 times. However, the development of each chain has diverged, and the growth rate of the head public chain has slowed down significantly. Among them, although Ethereum’s lock-up volume of nearly US$119.4 billion occupies most of the market share, from the beginning of this year to May this year, the total lock-up volume of Ethereum has increased by 350%, while it has only increased by 28.1% since May. .

At the same time, the ecology on some public chains has not recovered to the high point in May. Each public chain has begun to use platform currency for incentives. In the early stage, with the rapid growth of TVL, the price of tokens will also rise. However, with the excessive influx of funds and competition from other public chains, funds will flow to places with higher returns.

BSC also accounts for 11% of TVL with a lock-up volume of US$17.8 billion. Although it has increased by 286 times from the beginning of the year, the lock-up volume has dropped by 30% since the crypto market hit hard in May. After nearly a year of development, BSC still has the only decentralized exchange PancakeSwap and lending agreement Venus that have locked up more than 2 billion US dollars, and the overall ecology is not perfect. As the price of CAKE tokens falls and production is reduced, PancakeSwap’s appeal to users may also decrease. Polygon, which started ecological incentives in the past few months, currently has a serious decline in TVL, down to 5.2 billion U.S. dollars, only half of what it was when it was close to the May high.

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Behind the slowing pace of BSC, Polygon, Heco, etc., the market share of other newcomers is growing strongly, and a multi-chain ecosystem has already formed.

According to the statistics above, as of September 1, Terra’s total lock-up volume is 7.39 billion U.S. dollars, which has increased by 61.7% since May this year; Solana’s total lock-up volume is 3.4 billion U.S. dollars, which has increased by 1.5 times in the past three months. ; Avalanche’s total lock-up volume is nearly 2.19 billion, which has increased by more than 7.4 times in the past three months; Fantom’s total lock-up volume is US$750 million, which has increased by about 24 times in the past three months.

As the total lock-up volume accelerates madly, the tokens also take off. According to the statistics in the above figure, as of September 1, the average increase of ETH and BNB in ​​the past month was 40.6%, while the average increase of Terra, Solana, Avalanche and Fantom platform coins was as high as 215%.

In addition, more second-tier and public chains are gaining momentum. The two-layer Ethereum solutions with higher security, Optimistic Ethereum and Arbirum One, have both launched their mainnets. The Cosmos ecological project has begun to connect to IBC to open up cross-chain functions. Karura in the Kusama parachain has started liquid mining, and Moonriver has also started. It has taken the lead in supporting EVM project access, and Polkadot will also start slot auctions after passing an external audit. The progress of these blockbuster projects will also attract a lot of funds in the near future, and may affect the current multi-chain market structure. It is expected that the new round of ecological incentives will continue.

However, in the current public chain ecology, many funds are still in the state of “eco-wool” in the profit-seeking of funds in the circle. After the rate of return drops, the funds in the project may leave quickly, such as TVL in BSC, Heco, and Polygon. Both have decreased, and the public chain TVL, which has recently introduced incentive measures, hit a new high. How to really retain customers and funds, corporate chains have a challenge, such as the introduction of new and innovative products, Boca Acala explore traditional financial + DeFi on the introduction of new sources of assets.

On the other hand, security accidents in the blockchain are also happening constantly. According to PeckShield statistics, there were 35 security incidents in August, causing a total loss of US$413 million. Among them, there were 22 DeFi safety accidents. On August 10, the cross-chain protocol Poly Network was attacked, resulting in a loss of 610 million US dollars. This was the largest security incident in the DeFi field so far. It ended in the return of funds by hackers.

Below are the various data in DeFi.

Stable currency: USDT resumes growth, USDC growth slows

As of August 31, the main stablecoins and circulating market capitalization were USDT 65.5 billion, USDC 27.4 billion, BUSD 12.2 billion, DAI 6.1 billion, UST 2.4 billion, TUSD 1.4 billion, PAX 950 million, and HUSD 460 million. Compared with the previous period, the market value of stablecoins has risen by a total of US$4.7 billion. Among them, the circulating market value of USDT, USDC, DAI, UST, TUSD, and PAX increased by 3.7 billion, 76 million, 500 million, 360 million, 150 million, and 20 million U.S. dollars, respectively, while the circulating market value of BUSD and HUSD decreased by 33.42 million and 8810, respectively. Ten thousand U.S. dollars. USDT resumed its growth, while the previous faster growth of USDC and BUSD slowed down, and even the circulation market value decreased.

August DeFi Review: Can the new public chain spend huge sums of money to promote the increase of DeFi data in the multi-chain ecological arms race?

On August 24, Paxos announced that it would rename its US dollar stablecoin Paxos Standard (PAX) to Pax Dollar (USDP), making it easier to be recognized as a US dollar-backed stablecoin. USDP reserves are held in the form of 100% cash and cash equivalents.

Decentralized exchange “a hundred schools of thought contend”

Due to the rebound in prices, the trading volume of decentralized exchanges in August increased compared to a month. The distribution of trading volume is still dominated by Uniswap V3, Pancakeswap, MCDEX, and Uniswap V2.

August DeFi Review: Can the new public chain spend huge sums of money to promote the increase of DeFi data in the multi-chain ecological arms race?

However, with the development of emerging public chains such as Solana and Avalanche, as an important part of DeFi, DEX on each public chain is indispensable. According to data from CoinMarketCap, as of September 3, the trading volume of Raydium on Solana and TraderJoe on Avalanche in the past 24 hours has exceeded 100 million U.S. dollars, and Raydium’s trading volume is ranked seventh among all DEX on the chain.

Because of the launch of the dYdX governance token, the current daily transaction volume of dYdX is also over US$200 million. Since dYdX’s governance tokens are allocated once every Epoch (28 days), it is possible to know exactly how much DYDX can be obtained by increasing the transaction volume at the end of each Epoch, and many users will brush the transaction volume for transaction rewards. At the end of Epoch0, dYdX’s 24-hour trading volume once exceeded 1 billion US dollars, and surpassed Uniswap V3, etc., ranking first in the DEX trading volume rankings.

August DeFi Review: Can the new public chain spend huge sums of money to promote the increase of DeFi data in the multi-chain ecological arms race?

The hot spot of the market gradually shifts to NFT, Uniswap and other Fungible Tokens (Fungible Token, FT) DEX used in the overall ecosystem of Ethereum is decreasing. This can be seen from the proportion of Gas. OpenSea, a platform for trading non-fungible tokens (Non-Fungible Token, NFT), is rapidly emerging. According to statistics from Token Terminal, OpenSea’s revenue in the past 7 days was as high as US$36.97 million, surpassing Uniswap and others, and second only to Axie Infinity among DApps. Unlike other protocols, OpenSea’s revenue belongs to protocol revenue, while Uniswap’s revenue all belongs to liquidity providers. The current token holders and the protocol itself do not charge fees. Therefore, the current value of OpenSea may have exceeded that of established DEXs such as Uniswap.

Mortgage loan total borrowing volume returned to May high

As of the end of August, the total borrowing volume of decentralized mortgage lending was US$28.9 billion, an increase of 13% compared to a month ago, and it was the same as the record high in May. The main lending platforms are still Aave V2, Compound, Maker, and their total borrowing volume has reached a new high.

With the development of the multi-chain ecosystem, Aave is also the protocol with the largest amount of lock-up on Polygon. The founder of Aave said at the Chainlink Smart Contract Summit that the team is developing a multi-chain strategy and is considering deploying Solana and Avalanche outside of Ethereum and Polygon. In the public chain and the second-tier Ethereum network such as Optimism and Arbitrum.

August DeFi Review: Can the new public chain spend huge sums of money to promote the increase of DeFi data in the multi-chain ecological arms race?

The stable growth of Bitcoin anchor coins

The issuance of BTC anchor coins on Ethereum is still growing steadily. As of the end of August, a total of 272,907 BTC anchor coins were issued on Ethereum, an increase of 3.67% from the previous month.

At the same time, the number of BTCB issued on BSC has reached 78,125, second only to WBTC on Ethereum, and the issuance volume is twice that of HBTC.

August DeFi Review: Can the new public chain spend huge sums of money to promote the increase of DeFi data in the multi-chain ecological arms race?

summary

The expansion of DeFi from Ethereum to other chains has formed a trend, and it may not change in the short term. However, there is differentiation in this process. Assets on chains such as Terra, Avalanche, and Fantom have reached new highs with the launch of the token incentive plan at the public chain level, while the amount of locks on chains such as BSC and Polygon, which have developed well in the early stage, has not been locked. recover. For indispensable DApps such as DEX and mortgage lending, it may be possible to deploy in advance on the emerging public chain.

Text | Jiang Haibo Edit | Tong

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