The popularity of DeFi protocols and decentralized exchanges on the Ethereum blockchain has boosted the Total Value Locked within this ecosystem by 818% in the past year.
Ethereum continues to be the blockchain of smart contracts The blockchain is the most widely used blockchain in the world for the development and use of decentralized applications and protocols. The blockchain, which has achieved strong expansion and growth in recent years, closed 2021 with more than $153.000 billion dollars deposited in its ecosystem. Challenge (decentralized finance)As of today, Ethereum dominates 62% of all liquidity deposited in DeFi, with a Total Value Locked or TVL of $146.490 billion.
Source: DeFi Llama
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What are DeFi?
DeFi are platforms or protocols governed by code and smart contracts that continue to gain popularity and adoption among those seeking a decentralized, intermediary-free alternative to access financial services. Thanks to the properties of the technology blockchain and smart contracts, DeFi users can access loans, credits, trading and exchange, investments, yield and more without the bureaucratic processes of banks and without the need to be banked. All it takes to enter this new financial world is an internet connection.
On Ethereum, the leading network in this financial ecosystem, users have a wide range of options among its more than 390 existing decentralized protocols.
DeFi on Ethereum
Although Ethereum’s dominance over DeFi has diminished with the arrival of new, more scalable blockchains, and critics of the network continue to point to its expensive commission fees, Ethereum remains without a doubt the most important player in this digital financial ecosystem.
Source: DeFi Llama
Curve Finance, the dominant DeFi protocol
In the Ethereum DeFi ecosystem, the most dominant protocol is CurveFinance, which holds over $20.500 billion in liquidity at the time of writing. Curve Finance offers a simple interface for exchanging and trading stablecoins, thus playing an important role among stablecoin liquidity providers, who seek to minimize losses through a slippage or low slip.
According to data from DeFi Llama, Curve Finance holds 14,05% of all liquidity available on decentralized finance protocols, including liquidity available on other blockchains. To date, this decentralized protocol has been deployed on several blockchains such as Terra, Solana, BSC, and Avalanche, among others; which has further boosted its growth.
Decentralized exchanges and loans
Another platform that has been following the evolution and growth of DeFi on Ethereum is The Block. According to its data, the fastest growing decentralized protocols in 2021 were those focused on lending and trading.
Source: The Block
Liquidity deposited in Ethereum decentralized lending protocols such as Aave, Compound, Cream Finance, TrueFi, Rabbie Finance, among others, has grown 600% in the last 12 months. Meanwhile, DEXs or decentralized exchanges have seen their liquidity grow by more than 680% in the same period. Curve Finance, Uniswap, SushiSwap, Balancer, Bancor, Loopring, ShibaSwap, DODO, Kyber Network, and DeFiSwap are the most popular and used DEXs in the Ethereum DeFi ecosystem.
Regulators, the drivers of DeFi
The crackdowns that countries are beginning to take against cryptocurrencies have only increased the interest in DeFi. The specialized media in digital economy, Fintech and startups, iProUP, highlighted the growth that decentralized finance platforms and protocols had after the restrictions imposed by China on Bitcoin and cryptocurrencies in mid-2021. At that time, decentralized protocols had significant growth, surpassing $150.000 billion in TVL for the first time. Also, the popular browser extension for cryptocurrencies and DApps, Dappradar, managed to reach 10 million active users after the regulations that the Asian power imposed on cryptocurrencies.
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