Behind the 240% rise in DeFi coins: How many players are there and which exchange is the big winner?
Text | Edited by Carol | Produced by Bi Tongtong | PANews
Text | Edited by Carol | Produced by Bi Tongtong | PANews
One of the core functions of finance is to solve the incentive problem. The emergence and development of DeFi (decentralized finance) provides new ideas and possibilities for further realizing this function.
Since Compound launched "liquidity mining" in mid-June, its governance token COMP has provided users with incentives more than 6 times the original plan[1]. Stimulated by COMP, liquidity mining quickly became the mainstream governance model, and various DeFi projects launched new incentive schemes one after another. Total) more than $5 billion.
It only took more than a month for DeFi to blow up a "hurricane" from the formation of the outlet. Behind the popularity, this article will explain to you through data:
How popular has liquidity mining brought to DeFi?
For the entire DeFi market, is the role of liquidity mining "radiation" or "siphon"?
How many real players are there in DeFi?
What is the concentration of chips in DeFi?
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How many rewards have been dug up by liquidity mining?
Market capitalization is a reflection of the fair price of an underlying market and a reference indicator for measuring the value and scale of an underlying market. According to CoinGecko's statistics, as of August 10, the total market value of 62 DeFi projects has reached 11.252 billion US dollars, which is about 3.6 times higher than that on June 1, but only accounts for about 3% of the entire digital currency market.
Among them, the market value of the phone project LINK (Chainlink) is about 5.041 billion US dollars, accounting for about 44.80% of the entire DeFi market. Before this round of DeFi boom, investors did not pay much attention to oracle machines, but with the popularity of DeFi projects again, the competition in the field of oracle machines will become more intense, and other oracle machine projects will also rise together.
Secondly, the market value of COMP (Compound), MKR (Maker), SNX (Synthetix) and LEND (Aave) has also entered the top five in the DeFi field. Among them, the market value of COMP and MKR has exceeded 500 million US dollars, each accounting for about the entire market 4.91% and 4.89%.
The diluted market value of the market provides a possibility to understand the upper limit of the overall scale of the DeFi field, that is, if the market changes less and the remaining tokens are quickly dug out, then the market value of DeFi is likely to be close to the scale of 28.94 billion US dollars. However, judging from the current situation of DeFi projects "shoulder to shoulder" launching liquidity mining and the skyrocketing market of tokens as soon as they go online, this upper limit of scale is likely to be broken.
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Is Liquidity Mining Radiation or Siphon?
The fundamental purpose of liquidity mining is to motivate users to provide sufficient liquidity for the market. So, how much liquidity does this incentive scheme bring to the lending market?
According to DeBank’s statistics, benefiting from liquidity mining, Compound’s total loans soared from US$19 million on June 1 to US$1.040 billion on August 10, an increase of more than 54 times. Compared with Maker, the previous "boss" in the lending market, Compound's total borrowings were only 15.57% of Maker's on June 1st, but 2.63 times that of Maker's on August 10th.
If you calculate the change of Compound’s total daily borrowings, you can see that within 55 days after COMP’s launch (from June 16 to August 10), the average daily loan increment was about $17.92 million. July 2 and July 26 were the high values of the two borrowing increments, with borrowings increasing by about US$268 million and US$364 million respectively compared with the previous day.
COMP effectively stimulates the liquidity of Compound, so for the lending market, COMP will stimulate the liquidity of other DeFi platforms that launch liquidity mining, and the radiation effect is still subject to the overall market size of DeFi, but siphons the liquidity of other platforms What about liquidity?
Aave and dYdX are the two largest borrowing markets besides Maker and Compound. Among them, Aave has started liquidity mining, but dYdX has not. According to DeBank’s statistics, from June 16 to August 10, the total borrowings of both Aave and dYdX have increased. The former has a significant increase of about 501.37%, and the latter has a smaller increase of about 37.74%.
In addition to its impact on DeFi, liquidity mining may have an impact on the entire digital currency market. As DeFi coins continue to hit new highs, market funds that did not participate in DeFi may flow to the DeFi market.
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What drives the price of DeFi coins?
It has become a common sight for DeFi coins to skyrocket as soon as they go online. According to statistics, since June, the average price increase of the top 20 DeFi coins (except the stable coin DAI) has reached 243.72%, which is equivalent to an average daily increase of 3.48%.
Among them, BAND has the highest increase, rising from the closing price of $1.62 on June 1 to $14.9 on August 10, an increase of 819.75%. Also up more than 400% are LEND, RUNE, KAVA and SNX. However, the rise of COMP, the first to start liquidity mining, is not high. Since June, its currency price has climbed from $93.2 to $171.24, an increase of only 83.73%, ranking only 16th. In addition, among the 19 DeFi coins with high market capitalization, only AMPL has fallen in price, and it has fallen by about 28.60% since June.
Behind the surge of DeFi coins, is the volume and price consistent? Judging from the average daily nominal trading volume of each currency since June, LINK has the largest daily trading volume, exceeding 631 million US dollars, and the average daily trading volume of other tokens does not exceed 100 million US dollars. BAND, the currency with the highest price increase, has an average daily nominal trading volume of only 18.06 million US dollars, and COMP is only 504.5 billion US dollars. Compared with BTC and ETH, the "plate" of DeFi currency is not large.
However, the liquidity of most DeFi coins in the secondary market mainly depends on individual exchanges. For example, about 79% of the trading volume of BAND and LAVA came from Binance, 57.16% of the trading volume of LRC came from OKEx, and 51.24% of the trading volume of COMP came from CoinBene. In addition, about 80% of the trading volume of AMPL, BAL, NXM, RUNE, and YFI comes from two exchanges. In general, the concentration of secondary liquidity of DeFi coins is relatively high. In addition to centralized exchanges, Uniswap is also an important circulation platform for DeFi tokens.
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How many DeFi players are there?
The "get rich effect" of liquidity mining has attracted more people to actually participate in DeFi transactions? The number of addresses holding coins on the chain and the number of addresses calling contracts may provide a reference range for observing the user scale, although the number of these two types of addresses cannot be directly equivalent to the actual user scale.
From the perspective of the DeFi platform on Ethereum [3], the total number of holding addresses of the top 20 DeFi coins by market value is about 925,000, of which the number of holding addresses of LINK, LEND, ZRX and DAI exceeds 100,000 respectively. In addition, among the projects that are more concerned by the market, the number of currency holding addresses of COMP is only 22,400, that of BAND is only 5,400, and that of YFI is only 4,500. In general, even under the impetus of liquidity mining, the number of on-chain holding addresses of DeFi coins is not large.
Judging from the number of addresses that have called the contract in the past 7 days, the number of real DeFi users is even smaller. According to the statistics of DAppTotal, in the past 7 days, among the DeFi projects with high market capitalization, Maker has the largest number of users, with nearly 10,000 addresses calling the contract, followed by Balancer (BAL) and Synthetix (SNX) users, each with more than 4,000 The address of the contract has been called. Only 2440 and 1400 addresses of the popular projects Compound (COMP) and yearn.finance (YFI) have called the contract respectively.
Since a real user can have multiple addresses, even the number of addresses calling a contract cannot be completely equal to the user scale. However, judging from the huge difference in the number of currency holding addresses and calling contract addresses, the user scale of a single DeFi platform is still small, and the current rising currency prices may be mixed with more speculative factors.
From the perspective of the balance of the address on the chain, without considering the address with the largest balance (usually the address with the largest balance is the contract address), the address with a balance ranking 2-50, its total balance accounts for an average of 52.11% of the total circulation , while the total balance of addresses ranked 51-100 in balance only accounts for 4.99% of the total circulation on average. This also means that more than 90% of the addresses whose balance ranks other than 100 have an average proportion of less than 4.99% of the total balance. Among them, AMPL, BAL, NXM and ZRX are several tokens with more concentrated chips.
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[1] Refer to PAData "Has the Bull Market Come? In the second quarter, the average currency price rose by nearly 50% to a new high, and the public chain currency group "upper"".
[2] The market share here refers to the proportion of the total borrowings in a certain market in the overall market of the top 5 borrowings. Due to the current high concentration of the loan market, the market with the sixth largest loan amount only accounts for less than 1%. Therefore, for the convenience of statistics, the top 5 markets with the total loan amount are regarded as the total loan market. In this way, the actual market share will be higher than this time. statistic is slightly smaller.
