Decentralized finance (DeFi) proved this year to be a transformative industry for the cryptocurrency ecosystem. It also creates fluctuations in global financial markets as institutional investors have the potential to generate high returns from stable coins, altcoins and Bitcoin.
While the price action from Dogecoin (DOGE) has dominated the headlines in recent weeks, Delphi Digital has chronicled the growth of the DeFi ecosystem in the Ethereum (ETH) network, which has been getting stronger over the past month.
According to Delphi Digital researchers, while most of the growth is taking place on Ethereum-based DeFi platforms, some protocols have attracted attention, including Ethereum, BSC, Solana (SOL), Avalanche (AVAX), Polygon (MATIC) and Terra (LUNA). These now make up 34% of the total value locked in DeFi.
The BSC ecosystem is the second fastest growing DeFi ecosystem behind Ethereum. Behind this performance is its connection to the Binance ecosystem, which has enormous resources to help strengthen its native protocols.
Venus (XVS), PancakeSwap (CAKE) and PancakeBunny (BUNNY) are the three best DeFi protocols in BSC and the total value locked on the network is $ 49.1 billion.
Collectively, all layer-1 ecosystems now exceed $ 130 billion in locked-in cumulative value (TVL).
According to Delphi Digital, DeFi native stablecoins played a key role in the growth of the ecosystem and currently account for about $ 10 billion of the total market capitalization.
Dai’s (DAI) circulating supply recently exceeded $ 4 billion to establish itself as the largest DeFi stablecoin, while UST is a rapidly rising competitor in the Terra ecosystem.
From a broader market perspective, the growing supply of the best stablecoin projects (USDT and USDC) in circulation has further helped to increase the value of the crypto industry as a whole by providing a simple way for new funds to enter the market.
Delphi Digital points to the global M2 money supply, the broadest definition of the money supply, to highlight the importance of growth in the cryptocurrency ecosystem.
Due to gains in the cryptocurrency ecosystem since mid-2020, the crypto market’s cumulative market cap currently accounts for more than 2% of the global M2 coin supply, and Bitcoin (BTC) alone accounts for 1%. Collectively, the rest of the crypto market accounts for about 1.2% of the global money supply.
Just as it was revealed on May 6 that Goldman Sachs set up a crypto trading desk, the amount of funds locked in DeFi is expected to increase as signs of increased adoption of cryptocurrency have emerged.