How DeFi adoption varies across chains, BTC price affects velocity

The 2020 “DeFi Summer” marked a turning point for the blockchain industry, with several DeFi projects debuting this season, marking the beginning of a new era in finance.

The evolution of DeFi during this period has not only made waves. It catalyzed a paradigm shift and established itself as a bold pioneer of this unprecedented movement.

But what does the momentum the industry felt in 2020 look like from a hard data perspective?

To navigate the current bear market turbulence, we focus on the speed of DeFi adoption and the impact of market cycles on adoption as token prices drop by up to 90%.

DeFi TVL analysis by chain since 2017

Against this background, our analysis covers Ethereum, Tron, BNB Chain (BSC), Arbitrum, Polygon, Optimism, Avalanche, Mixins, Pulse, Kronos, Solana, Cardano and Osmosis.

Source: Defilama

The table below shows the analyzed chains, the date on which they reached their all-time high in TVL (tracked by DefiLlama), the time it took to reach the all-time high since launch (velocity), and the all-time high. I am. (ATH), and his current TVL.

chain Start of activities* ATH date ATH TVL speed Current TVL
Ethereum November 2017** November 2021 $108.92 billion 1280 days $25.73 billion
tron August 2020 November 2021 $6.74 billion 470 days $5.69 billion
BSC October 2020 May 2021 $21.94 billion 186 days $3.36 billion
Arbitrum August 2021 May 2023 $2.53 billion 614 days $2.12 billion
polygon October 2020 June 2021 $9.89 billion 249 days $9.7 billion
optimism July 2021 August 2022 $1.15 billion 393 days $9.2 billion
avalanche February 2021 December 2021 $11.4 billion 302 days $6.6 billion
will be mixed December 2021 June 2022 59 million dollars 182 days 44 million dollars
pulse May 2023 May 2023 $4.9 billion 5 days 34 million dollars
Kronos November 2021 April 2022 $3.22 billion 145 days 32 million dollars
Solana March 2021 November 2021 $10.03 billion 236 days 31 million dollars
cardano January 2022 March 2022 $3.3 billion 81 days $1.8 billion
penetration June 2021 March 2022 $1.83 billion 253 days $1.3 billion

The graph below visualizes the speed of each chain to reach its all-time high in TVL. DeFi pioneer Ethereum has technically been in DeFi activity since 2017, and thus stands out as the slowest to adopt, considering it reached its all-time high in November 2021. There is.

Interestingly, November 2021 coincided with Bitcoin’s all-time high, which may have influenced Tron and Solana DeFi, which peaked around this time.

defi tvdefi tv
Source data: DefiLlama**

Bitcoin adjusted velocity

Since Bitcoin is considered a barometer of the overall health of the crypto market, the speed of DeFi adoption was adjusted based on the price of Bitcoin at the time of each chain’s DeFi launch.

crypto slate We cross-referenced Bitcoin price and all-time high data to create a Bitcoin Adjusted Velocity (BaV) for each chain.

The gray line and plotted points in the chart below represent the BaV of each chain. This chart reveals that his DeFi ecosystem of Tron, Polygon, and BSC are all positively impacted by the Bitcoin price and the bullish sentiment of the market supporting it.

BTC Adjusted Defi BTC Adjusted Defi
Source data: DefiLlama***/Yahoo Finance

Analysis of chain speed

Ethereum was removed from the chart above for readability as it posted a huge velocity score of 7,936 compared to the next close, with Tron at 1,065 and Arbitrum at 829.

Considering the bear market, Pulse slowed down and reached ATH in just 5 days, resulting in a score of just 10.98. The next lowest is Cardano at 109, which is about 10 times higher.

Using BaV metrics, the best performing chains appear to be Pule, Cardano, Cronos, Solana, and Osmosis. On the other hand, Ethereum, Tron, and Arbitrum were the slowest.

Tron is currently one of the chains closest to its ATH and is poised to perform well in 2023. If Tron surpasses its $6.47 billion ATH from its current $5.6 billion level, it could outperform Ethereum on BaV and standard velocity measures.

tron tvtron tv
Source: Defilama

The diverse trajectory of DeFi adoption across different blockchain networks highlights the importance of timing, market conditions, and the inherent advantages of being a first mover in the space. But as the remarkable story of Pulse shows, even new entrants can achieve rapid growth if they have the right ingredients in place.

understand the data

The speed with which TVL reaches all-time highs is a complex metric. Some may argue that the faster you climb, the faster you come down, and that’s definitely true with some chains.

However, the fundamental factors we analyze here are about momentum and adoption. Additionally, all of the listed projects have locked in at least $330 million, with most of them exceeding his $1 billion mark. These are not projects with low market capitalization or low liquidity.

The projects analyzed in this article are important for identifying the strengths and weaknesses of the DeFi onboarding process to date. The average time it took for a chain to reach ATH was around 338 days, which means that, outliers aside, most chains took almost a year to reach their peak DeFi activity.

*Release date refers to the date of the first data tracked by DefiLama for each chain**
** Uses MakerDAO’s DAI launch as the Ethereum DeFi launch date and data based on historical data from CoinmarketCap.
***Additional data included due to DefiLlama 2020 closing date.

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