Author: insights4vc
Translation: Blockchain in Vernacular
In today’s newsletter, we will cover the decentralized finance (DeFi) landscape as of mid-August 2024, focusing primarily on-chain data for various DeFi forks. As shown in the Kaito mind map below, the Web3 space is currently dominated by memecoins and AI-related projects, while DeFi is lagging behind.
Mind share (Source: www.kaito.ai)
1. Total locked value (TVL)
Total locked value (TVL) is a metric used to assess the scale of adoption of DeFi projects, measured by calculating the total value (in USD) of all assets locked in the corresponding smart contracts. As of mid-August, the category with the highest locked value was liquid staking, which reached $43.7 billion, followed by lending at $31.5 billion and decentralized exchanges (DEX) at $17.3 billion.
Locked Value by Category
Ethereum remains the blockchain with the highest locked value at over $50 billion, while Solana is close to $5 billion. Although the overall trend is still upward compared to 2023, the locked value has dropped from over $75 billion to around $60 billion since the beginning of June, a decrease of about 20%. It is worth noting that the current locked value is more than half lower than the level in November 2021.
Locked value by blockchain
2. Stablecoins
In mid-May, we discussed the mechanics of stablecoins in detail in our previous newsletter (available here). Since then, we have not observed any significant market fluctuations. USDT remains the market leader, maintaining steady growth and currently has a market capitalization of approximately $116 billion.
Market value (Source: defillama.com)
USDC distribution by category (EOA — External Accounts)
USDT distribution by category
PayPalUSD (PYUSD) is now live on the Solana network as of May 31, 2024, the news was announced at the Consensus 2024 conference. This integration takes advantage of Solana's fast transaction confirmations and low costs, providing users and developers with the ability to complete payments in seconds. Sheraz Shere, General Manager of Payments at the Solana Foundation, emphasized that Solana's speed and scalability make it an ideal platform for global financial institutions like PayPal to develop accessible, cost-effective, and instant payment solutions. PYUSD can be accessed through PayPal, Venmo, Paxos, Crypto.com, and Phantom, and PYUSD transfers between Ethereum and Solana are fee-free. PYUSD on Solana is issued by Paxos Trust Company.
As of August 15, the total market cap of PayPal USD is $767.47 million, with a circulating supply of 418.67 million on Solana (SOL) and 348.94 million on Ethereum (ETH).
PYUSD on Solana vs PYUSD on Ethereum
3. Decentralized Exchanges (DEXs)
As of August 14, 2024, Uniswap accounts for nearly 40% of DEX trading volume share, but current trading volume levels are lower than 2021 levels.
For DEXs on Solana, Raydium and Orca dominate the market with trading volumes of $5.8 billion and $4.5 billion, respectively. We observe that since the beginning of 2024, most new tokens have been created on Solana, at around 100,000 per week, with totals ranging between 130,000 and 140,000 in recent weeks.
In addition, the proportion of trading volume in DEX compared to CEX has shown a steady upward trend, with the proportion in the futures market at 6.72% and the proportion in the spot market at 12.44%. Telegram Bot's trading volume has stagnated in the past few weeks, about half of the value recorded in June and the first quarter of 2024.
DEX Trading Volume
EVM DEXs by Trading Volume
DEX and CEX spot trading volume ratio (%) — (August 14, 2024: 12.44%)
DEX and CEX futures trading volume ratio (%) — (August 14, 2024: 6.72%)
New Tokens Appearing on DEX
DEX on Solana — Trading Volume
Telegram Bot — Transaction Volume
Since its launch in March, Pump.fun has attracted a lot of attention in the early stages of the Memecoin craze. The platform simplifies the token issuance process with a cost of 0.02 SOL, and the cumulative number of tokens has exceeded 1.77 million, and the platform's daily revenue has reached a record high of more than $5.5 million after Elon Musk's conversation with Donald Trump. In the past 30 days, the tokens generated by Pump.fun have the highest trading volume on Raydium, close to $6.7 billion.
Pump.fun — Launch Token
Pump.fun Daily Revenue — (August 13, 2024: $5.33 million)
Pump.fun — Income
4. Liquidity Staking
Ethereum introduced a staking mechanism in December 2020 through the ETH Staking Deposit Contract. However, users were unable to access their staked funds until the Shanghai upgrade in April 2023, which led to liquidity issues. To address this issue, Liquid Staking Derivatives (LSDs) were created, allowing users to deposit ETH and receive a synthetic asset that can be freely traded or used as collateral in DeFi without sacrificing returns. This innovation makes Ethereum staking no longer require complex infrastructure or locking up 32 ETH.
Locked Value in Liquidity Staking
For several months, Lido has been the absolute leader in the liquidity staking space, with a total locked value (TVL) of over $25 billion. However, over the past month, weekly activity by unique addresses has dropped significantly, especially in terms of Ether.fi-related activity.
Active Addresses (Weekly)
5. Borrowing
Since March, Aave has maintained a clear lead in Total Value Locked (TVL) exceeding $10 billion, establishing its leadership in the lending space. In August, even though we are only halfway through the month, we have already recorded the second highest value of Ethereum lending liquidations.
Locked Value in Lending
Ethereum borrows market liquidation
6. Cross-chain bridge
Since mid-May, we have observed a significant drop in transaction volume across the cross-chain bridge space. Currently, ArbitrumBridge ranks first with a daily transaction volume of nearly $40 million. zkSync Bridge has also experienced a significant drop in various indicators over the past few months.
Cross-chain bridge (transfer transaction volume)
zkSync cross-chain bridge
StarkNet cross-chain bridge
Base cross-chain bridge
7. Restaking
Since the end of last year, Eigenlayer has been leading the DeFi restaking space with a total locked value (TVL) approaching $15 billion. After multiple months of positive net inflows, Eigenlayer has seen outflows in recent weeks.
Awareness of re-staking (Source: www.kaito.ai)
Total Value Locked (TVL) — Eigenlayer, Symbiotic, and Karak
Total Value Locked (TVL) — Net Inflow
Share of daily active re-staking and regular staking validators
8. Conclusion
As shown in the on-chain data in the above newsletter, we can observe that despite the recent market volatility, the protocols in the DeFi field are not facing major solvency issues. Although there is a clear stagnation or even downward trend, the overall trend is still upward compared to last year.
