Since March last year, ETH has risen all the way from a minimum of more than 80 US dollars to break through 2000 US dollars in February this year, setting a record high. The rise of ETH is inseparable from the ecological prosperity brought by DeFi. But at the same time, it also brings problems such as rising transaction costs and network congestion. This makes some users have to turn their attention to other public chains. This month, investors’ attention to DeFi projects was also mainly focused on other public chains. Many outstanding DeFi projects appeared in the ecosystem of Ethereum’s competitors.
Emerging public chain DeFi is active
Because of the composability of the Ethereum network, with each new application launched, the network usage is not just a mere addition. For example, Uniswap and Sushiswap, many ERC20 tokens will be launched on the two largest decentralized exchanges at the same time. When the prices of the two are slightly different, there will be arbitrage robots that move between the two. The various decentralized exchanges running on Ethereum also greatly increase the opportunities for arbitrage trading.
Since the rapid development of DeFi in June last year, the average value of Gas Price has risen from 30 Gwei to hundreds of Gwei in September, reaching 538 GWei on September 17 when Uniswap was issued. The recent average of Gas Price has been close to 200Gwei, and the price of ETH today is several times higher than before. The high transaction costs discouraged many people.
Many public chains, especially centralized exchange public chains with capital and user support, have seized this opportunity. Binance Smart Chain BSC, Huobi Heco, and Solana, supported by FTX Exchange, are all in this one. Good results have been achieved in the month.
In terms of market value, the market value of ETH is still far higher than other public chains known for their applications. The best-performing BNB, supported by the positive news of its listing on Coinbase, rose to $340 next time, HT exceeded $26, and SOL topped $18. At present, the market value of BNB is 38.2 billion US dollars, more than 20% of the market value of ETH; and the market value of SOL has also entered the top 20.
PancakeSwap and Venus are the largest decentralized exchanges and mortgage lending agreements on BSC respectively. Their platform currencies CAKE and XVS are also one of the most eye-catching assets in February. At present, the two locked assets have exceeded 3 billion US dollars. And Maker, which has the most funds locked in Ethereum, only locked $6.1 billion in funds. Binance Exchange also vigorously supports projects such as PancakeSwap in the Binance ecosystem with new currency mining and other activities. Compared with Ethereum, the projects on BSC already have a certain degree of competitiveness.
The largest project in Heco is the centralized exchange MDEX, which has only been online for more than a month, and currently has $2 billion in funds locked. Compared with other decentralized exchanges, MDEX has outstanding trading volume data, with a turnover of 4.75 billion US dollars in the past 24 hours; and Uniswap’s trading volume in the past 24 hours is only 840 million US dollars, of course, thanks to MDEX’s trading mining mine. The commission fee ratio for MDEX transactions is the same as Uniswap, both 0.3%, but it will not be distributed to the corresponding liquidity providers, but will be used for repurchase and destruction and rewards to pledgers in the board of directors. It should be noted that the DeFi project on Heco is still in its early stages. After HashBridge goes online, it can get a hundredfold profit in a short period of time, but it can also quickly drop by 90%, and there are even cases where the project uses the reserved loopholes to mint coins.
Raydium, an automated market maker and liquidity provider on Solana, issued the governance token RAY at the end of February and started liquidity mining with USDT/USDC/SRM. Raydium also uses the constant product formula of K=Y*X, but it provides an optimized solution. Combined with Serum’s lending function, Raydium may realize the function of margin trading. After RAY went online, there have been dozens of times increase.
New developments in the Ethereum project
Although Ethereum has various competitors, there is no doubt that Ethereum is still one of the safest public chains and is more suitable for large capital use. At the same time, there are also various new applications on Ethereum.
PoolTogether is a lossless lottery project. The principal of the user’s participation will be put into the Compound and other agreements to generate interest, and the interest will be distributed as a bonus to the lucky winners, and users who have not won can get back their principal. PoolTogether was supported by the MakerDAO Foundation in the early days and also received 100,000 USDC sponsored by the Coinbase USDC Bootstrap Fund. Since 2019, tens of thousands of addresses have used the protocol, and these users have also received POOL token airdrops.
Alchemix is to solve the problem of the liquidity of pledged assets. Through the pledged assets, the synthetic assets of the platform can be loaned. For example, mortgage DAI can lend stablecoin alUSD, while DAI generates income in agreements such as Year, which can lend more alUSD over time, and can also be used to repay debts and get back the principal. Within 24 hours of the launch of Alchemix’s liquidity mining, the circulation of alUSD reached 50 million, and the annualized rate of return using stablecoin mining can also reach 400%. In the future, the upper limit of the system alUSD will be increased by voting.
Mask Network issued a platform currency MASK through ITO this month, and users who successfully snapped up can also get dozens of times of revenue. Mask Network is a bridge between Web 2.0 and Web 3.0, in the form of tools, so that existing Twitter, Facebook and other users can directly participate in DeFi. It can be said that Mask Network is an infrastructure, but it also plays an important role in DeFi. For example, using Mask Network can complete digital currency transactions in Twitter and realize the function of a decentralized exchange.
The following is a detailed view of the various data in DeFi.
The total lock-up volume increased by 35.5%
The various DeFi data in Ethereum continues to grow. As of the end of February, the total amount of locked positions in Ethereum has reached 54.6 billion U.S. dollars, an increase of 14.3 billion U.S. dollars compared with the end of January, an increase of 35.5%. The agreements with the highest locked positions are Maker, Compound, and Uniswap, with locked funds of 6.2 billion, 5.1 billion, and 4.3 billion US dollars respectively. This month, MakerDAO added Uniswap WBTC/DAI and AAVE/ETH LP Tokens as collaterals of DAI through voting to further enrich the types of mortgage assets.
The daily trading volume of decentralized exchanges hit a new high
The daily trading volume of decentralized exchanges in Ethereum has increased as a whole this year, and this month also set a new high in daily trading volume. At the end of February, the daily trading volume of $2.8 billion on decentralized exchanges increased by 55% compared to a month ago. On February 23, the overall trading volume of DEX reached US$4.58 billion, an increase of 38.8% from the high of US$3.3 billion in October last year. The appearance of this data last year seemed abrupt, and now this transaction volume has become the norm.
Mortgage lending: Aave locked position is surpassed by Compound and Venus
Total borrowings increased by 86% compared with the previous month, reaching US$9.4 billion. The borrowing volume of the Compound platform also exceeded US$4 billion, accounting for 43%. Venus on the Binance Smart Chain also surpassed Aave’s v1 and v2 versions in terms of borrowing, and the proportion of borrowing increased from 3% to 20%.
Stable currency: BUSD and DAI exceed 2 billion for the first time
The issuance of stablecoins in Ethereum also rose to 36.4 billion U.S. dollars at the end of February, an increase of 36.8% compared to the end of January. Among them, USDT accounted for 54.95%, and the issuance of USDT on the Ethereum chain exceeded 20 billion for the first time. The issuance of BUSD and DAI both exceeded 2 billion for the first time. With the support of Binance, the issuance of BUSD surpassed DAI, second only to USDT and USDC.
BTC-anchored coins are generally stable, with HBTC ranking second
The circulation of BTC-anchor coins also reached 173,000 at the end of February, an increase of 6.4% compared to the end of January. In January, a large number of HBTC backed by Huobi was issued, and the issuance volume rose to the second place. There was no major change in the issuance volume of BTC-anchored coins this month.
Derivatives are one of the important tracks for competition this year. The largest derivatives platform dYdX, this year’s lock-up volume and transaction volume have increased significantly compared with the previous year. As of the end of February, dYdX’s lock-up volume has reached 250 million US dollars, an increase of 56% compared to January. This is probably because dYdX is about to issue its own governance token, and the funds stored in the contract can be used for lending.
At present, dYdX’s perpetual contract is transitioning from Layer1 to Layer2, and the Zero-knowledge proof research and development agency StarkWare’s Layer2 solution will be used in the future. At present, dYdX is opening the application for alpha beta qualification. You can register with your email and wallet address, and you can access it early after registration.
Synthetic assets: Synthetix opens synthetic stocks
Synthetix, a synthetic asset project, has outperformed the overall market performance in the near future. Under the pressure of Mirror, synthetic stocks have been gradually opened. Synthetix also introduced Optimism’s two-layer solution, and the Layer 2 project may usher in an explosion this year or even in the near future.
to sum up
DeFi makes the ecology of Ethereum more prosperous, but the increase in Gas fees also makes some users have to switch to other networks. Recently, public chain ecosystems such as BSC, Heco, Solana, and Avalanche have developed rapidly. Because Ethereum is still one of the most secure public chains, usage scenarios can always be found, and the innovation of DeFi is concentrated on Ethereum. Because of the different application scenarios, the current development of other public chains has not affected Ethereum.
However, Ethereum will also use various Layer 2 expansion technologies to temporarily solve the congestion problem. The high gas fee affecting the DeFi experience may not last too long. Vitalik also recently stated in the community that the first batch of Rollup that supports EVM (Ethereum Virtual Machine) may be launched in March and will reduce transaction fees by 99% after launch. At the same time, Vitalik also said that Optimism and arbitrum are in a leading position. DeFi on Layer 2 may become the next hot spot in the market.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.