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DeFi Quietly Doubled By Most Metrics in Q1

While searches for “NFTs” have outpaced those for “DeFi” by seven to one at the close of 2021’s first quarter, DeFi has quietly doubled or tripled by most key metrics.

Deposits in Ethereum-based DeFi more than doubled to $37.7B from $16.6B at the start of the year, according to DeBank, besting 2020s Q4’s 90% increase from $8.3B. 

It bears noting that Ether itself more than doubled in each of the last two quarters. As roughly $18.7B of ETH is locked in DeFi it’s fair to say that roughly half of Ethereum-based, $37.4B TVL can be attributed to the asset’s Q1 appreciation. While this somewhat puts a damper on the explosive growth of TVL, ETH itself locked in DeFi protocols increased by roughly 28%, or 2M, to 9.7M according to DeFi Pulse.

Binance Smart Chain (BSC), while arguably not decentralized, had a breakout quarter with it’s TVL jumping more than 34 times to $8B by the quarter’s close. That’s more than “DeFi Summer,” where, using Q3 of 2020 as an approximation, Ethereum’s total TVL jumped by six times, to $8.4B according to DeBank.

 DEX Trading Volume Doubles Too

Decentralized exchange (DEX) daily volume appears to have doubled in 2021’s Q1. The last day of sub $1B in DEX trades was Dec. 31 after which daily volume has never gone below that point. Daily DEX volume has averaged over $2B in Q1 2021 compared with sub $1B averages in Q4 of 2020 according to DeBank.

As with TVL, DEX volume has been bolstered by BSC’s rise. The chain had never facilitated more than $300K of trading prior to 2021, but now appears to be on track to average over $1B in volume after hitting a high of $1.9B on Mar. 24 before dropping back down slightly below the 10-figure mark. 

Still, isolating volume for Ethereum also shows a doubling, with the chain hitting an all-time high of $4.5B on Feb. 22 before trading slowed slightly to average slightly below $2B during March.

Stablecoins Minted, Borrowing Volume, Defi Pulse Index, All Up By Multiples

Stablecoins also doubled in Q1 of 2021, jumping roughly 100% from $21B worth at the start to over $42B at the end. Unlike TVL, this was a big jump compared with 2020’s Q4 already noteworthy 40% increase in stablecoin issuance from $15B to $21B.

Borrowing volume across platforms also jumped by more than 3.5 times from $3.9B to $13.1B. Isolating for Ethereum still shows a near tripling from $3.6B to $10.1B according to DeBank, with Compound accounting for 55% of the market, while MakerDAO accounted for almost 30%. This is an acceleration compared with 2020’s Q4 which had an increase of $2.2B to $3.6B in borrowing on Ethereum.