DeFi Llama
Analysing the state of DeFi in Q1 2024 with DeFi Llama
TLDR:
DeFi is a rapidly growing segment of Web3. The best place to keep up with it is DeFi Llama which aggregates all the DeFi data out there.
This post gives a summary of the current state of DeFi in Q1 2024, showing for example just how dominant Ethereum is today with some 58% of DeFi TVL.
DeFi TVL is still only 3.5% of the total $1.8tn crypto market, while stablecoins are at 7.5%. Clearly there’s a lot of room for DeFi to grow.
DeFi Llama is a treasure trove of data. Plus it even has great tools like for swapping, checking your portfolio, streaming payments, and a DeFi news site.
We minted out the remaining milliondollartokenpage.com (MDTP) NFTs for this batch! Congrats to anyone that grabbed themselves some for free in my last post! Over 2000 NFTs have been minted out of the total 10,000. We’ll probably give out more free NFTs when we release the next 1000, so keep an eye on these posts for more chances.
If you’ve never come across our project MDTP then you can read this blog post that I wrote to learn more about it.
For today’s post I wanted to look through the state of DeFi as we’re definitely in the bull part of the cycle but we haven’t reached the real mania phase just yet.
For aggregated data in DeFi the best place to go is DeFi Llama, so this post is as much an analysis on the current state of DeFi as it is showing what DeFi Llama can do!
DeFi
Decentralised Finance (DeFi) is used as a comparison to Traditional Finance (TradFi) and is already a huge segment of Web3 that’s growing exponentially. DeFi’s goal is strongly aligned with a term we hear a lot in crypto of “Banking the unbanked”.
The promise of global financial services without the need for banks is a lofty goal, and where I personally think a lot of the magic of Web3 comes from. Even if today most people in DeFi are just degenerately chasing higher yields and airdrops!
Since things are moving so fast it’s incredibly hard to keep up with everything happening in DeFi with all the new chains, protocols, yield opportunities, airdrops, and more - and that’s where DeFi Llama comes in!
DeFi Llama, aggregates all this different data into a single place, making it easier for people to track everything that’s going on. It really is a one-stop shop for all things DeFi and by far the best tool out there today.
Overview of DeFi
Opening up DeFi Llama you get a great overview of the DeFi space.
We can note a few key things immediately:
Total Value Locked (TVL) at $65bn - Between all the DeFi protocols out there, there’s already a fair amount of money locked in DeFi. But considering the entire crypto space is around $1.8tn right now, it’s still only around 3.5% so there’s plenty of space to grow.
Historical graph starting in June 2018 - 2018 is less than 6 years ago, this shows just how nascent DeFi is. Yet, we had an even higher TVL peak of $176bn in November 2021. No doubt we’ll peak higher in the coming bull run mania.
Lido’s Liquid Staking at $24bn - Over 35% of todays DeFi TVL is ETH staked in Lido! That show’s just how dominant both Lido and Ethereum are in DeFi. Most of DeFi is happening in Ethereum and Lido is the most significant player.
Stablecoins at $136bn - I covered Stablecoins a few weeks ago. We can see here they are at over 7.5% of the $1.8tn crypto market, and even double the full amount staked in DeFi. DeFi TVL has a lot to grow to compete with Stablecoin TVL.
There’s so much more data in DeFi Llama that it’s hard to even know where to start. But let’s explore some of these categories further with a few bullet points each.
Top Chains
Ethereum is by far the most dominant player in DeFi with 58% of TVL. Even with all the Solana activity nowadays Ethereum is still about 20x larger than Solana.
Tron is surprisingly the second largest with 13%. Most of that comes from JustLend with curiously over $4.5bn worth of BTC stored there.
Ethereum has by far the most DeFi protocols on it, with 960+ protocols, and other EVM chains dominate DeFi TVL charts.
Bitcoin only has 12 protocols by comparison, but when considering it was never intended for smart contracts, it does impressively have almost 1% of all DeFi TVL.
Top Protocols
Aave is unsurprisingly the top Lending protocol in several EVM chains like Ethereum, Polygon and the top two L2s Arbitrum and Optimism. Same goes for Uniswap in the DEX category.
Most chains tend to have their own Lending and Stablecoin projects. Restaking though is new, with only Eigenlayer on Ethereum and Octopus on Near.
Stargate is the dominant cross-chain protocol in TVL across several chains.
Protocol Categories
Liquid Staking is the largest by a margin, this is mostly down to Lido, which is over 60% of all liquid staking TVL.
Borrowing and Lending is the other major category with Aave leading the way at over $7bn but Tron’s JustLend holding it’s own with over $6.5bn, mainly down to that $4bn of BTC I mentioned earlier.
DEXs hold a lot less TVL and the leaders are Aave, Curve and PancakeSwap, each operating on over 9+ EVM chains. There’s over 1100 DEX protocols in total!
Bridges include WBTC and Tron’s JustCryptos at the front. These are unusual to include here, excluding them Wormhole is next with Portal bridge at $1bn TVL.
Foundations and Treasuries
Several Ethereum related projects dominate by total treasury eg. Uniswap, ENS, Optimism, Arbitrum. Although they are almost entirely holding their own token.
Excluding own token the rankings are more mixed. Yet very few treasuries are mainly in stablecoins so they are mostly subject to market volatility either way.
Yields
Lido is where most park their cash for yield, probably because most people are confident in ETH as a long-term place to store value, and Lido dominates its liquid staking. Other liquid staking protocols on ETH also dominate the charts.
MakerDAO’s DSR (that I covered in a recent post) is the top low-risk option by TVL, with over $1.1bn in DAI stablecoins earning a 5% return.
There are over 3000 liquidity pools to park your cash for an APY above 20%! Although they are all much riskier and unlikely to provide this into the long-term.
Fees
Gas on Ethereum is by far the biggest way money get’s spent, with several Ethereum based protocols at the top of the charts like Lido and Uniswap too.
Bitcoin takes a strong second palce in terms of fees, although when you look at the past year Ethereum has had 2.5x more spent on fees.
Stablecoins
USDT dominates the market with over 70% market share. People have learned to trust it probably in part since it has survived the longest.
USDT, USDC and DAI alone account for around 95% of the total stablecoin market with over $127bn in market capitalisation.
Raises
We’re almost at $100bn worth of investment raised in DeFi from ICOs and traditional investments.
FTX and Celsius were some of the largest raises with $900m and $750m respectively, and also some of the largest failures in the space.
EOS’s ICO was by far the largest single investment, with over $4bn to build a chain that’s basically been forgotten in the space - where did all the money go?
Hacks
Over $7.5bn has been hacked in DeFi, with 35% coming from bridges and the rest from other DeFi companies and protocols.
Ronin network for Axie infinity had a $624m hack that puts it at number 1 in this list. FTX post collapsing had a $450m hack that puts it in 5th place.
Most of the largest hacks happened in the Ethereum ecosystem, probably because it’s where most of the liquidity is in DeFi.
Tools
Outside of the considerable amount of data, DeFi Llama even has some tools!
Llama Swap is even a great “aggregator of aggregators”, as it aggregates all the other DeFi swapping protocols and DEXs out there. This makes it a great one-stop shop to do all your token swapping.
Llama Folio offers an open source and privacy focused DeFi portfolio checker. It does a great job of showing how your money is spread out in DeFi.
Llama Pay is a really cool tool for doing streamed payments. So you can fill up a channel with ETH and let someone receive a salary over time for example. Plus it can do token vesting and other streamed payments.
Overview
On the whole though it’s clear that DeFi volumes are still predominantly dominated by Ethereum and its EVM ecosystem (with its many L2s), where DeFi originated.
We also saw that the Tron ecosystem seems to have a lot of Stablecoin volume and a surprising amount of Bitcoin locked up. Solana is growing fast with new protocols popping up all the time. Plus Bitcoin is surprisingly starting to grow its own DeFi ecosystem even though it’s not intended as a smart contract platform.
I have just scratched the surface on what DeFi Llama offers. Llama University can help you learn how to use DeFi Lllama since it’s such a complex and complete tool. This sits within DeFi Llama’s news site that’s also really informative in itself.
DeFi Llama is a treasure trove of DeFi information, you can really lose hours just pouring through all this information.
Have fun hunting around all the different graphs and data!