With Binance predicting ‘meteoric growth’ – above the billions in transactions this year – DeFi could be the best crypto investment of 2020.
Two new reports have highlighted the explosive growth of Decentralised Finance.
Primarily built on Ethereum – although there are plenty of decentralised apps (Dapps) running on EOS and Tron too – the evidence suggest 2020 could be the year of DeFi.
DappReview indicates there were around $11.5 billion worth of transactions on Ethererum based DeFi platforms alone last year, with Binance Research predicting “metoric growth” ahead could draw in capital “beyond the scope of the existing crypto-industry”.
Binance Research is tipping that Compound or even Australian project Synthetix is set to unseat Maker this year as the dominant DeFi platform.
Be warned though: DeFi is still a relatively small part of the overall market so there are plenty of risks at this stage.
3 million Ether locked in DeFi right now
DeFi Pulse shows the total amount of Ethereum locked in DeFi plaforms recently hit an all time high of 3 million ETH, and the total value of locked funds close to $700 million.
DappReview’s latest report shows that Dapps on these three blockchains alone turned over $23 billion worth of transactions. (To be precise, these three accounted for 98% of the total).
Ethereum led the way with $12.8 billion worth of transactions. There were 22 million transactions in total, across around 1200 or so active Ethereum Dapps.
Ninety percent of the total transaction value (or around $11.5 billion) came from DeFi projects including Kyber (35,570 unique users), Compound (21,424 new users) and Uniswap (19,161 new users).
Aussie project Synthetix, which kicked off in the first half of 2019, attracted 10,741. Its collateral grew from $1.6 million in March to $160 million by the end of the year.
Competing blockchain EOS recorded $6 billion in transactions while Tron had $4.4 billion – $3.9 billion of which were related to gambling and 8% were related to DeFi.
Binance Research examines DeFi closer
The team at Binance Research looked at DappReview’s figures and added some of their own analysis.
Binance’s report highlights that there more than 40,000 new DeFi users every month, peaking at 60,000 new users in August.
Most were using Decentralised Exchanges, however other financial applications grew from 4,649 new users in January to almost 26,000 new users by December.
“While DeFi represents a tiny segment of the crypto-industry, it is one of its most vibrant areas,” the report noted.
“Once some technical and legal challenges are solved we expect a meteoric growth in the decentralized financial industry, likely to attract individuals and capital beyond the scope of the existing crypto-industry.”
Binance gets out the crystal ball
The report forecasts an end to Maker’s dominance this year, with Compound’s volume and locked amount set to exceed it.
Synthetix will also post a challenge to Maker as it continues to expand what assets Synths can be pegged to.
Other forecast for this year include that Tether will be integrated into DeFi (following the large scale migration of USDT to Ethereum this year) and that DeFi derivatives will launch on the Ethereum mainnet.