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More and more Ethereum address holders are trying their hand at decentralized finance (DeFi). Their share reached 65% in Q2 according to ConsenSys.
Decentralized finance, still a niche market? Compared to traditional finance, no doubt. However, DeFi protocols occupy a growing place in the crypto universe.
The quarterly report from ConsenSys, the co-creator of Ethereum, provides a new illustration. The ETH blockchain is the cradle of DeFi. And Ethereum address holders are increasingly investing in this universe.
Moreover, the total number of these addresses grew by 10% between April and June 2021. At the beginning of August, Etherscan counted 165 million addresses (against 131 million at the beginning of the year). This is not surprising.
During this period, the price of cryptocurrencies was soaring, starting with the price of Ether. ETH climbed to its ATH of $4,000 – before falling sharply like the rest of the crypto market following the crash.
But during Q2 2021, Ethereum users also interacted more with the DeFi protocols hosted on the blockchain. ConsenSys estimates that 65% of these addresses were using at least one DeFi service during those three months.
That’s 2.91 million unique addresses. Not so surprising. Ethereum, despite its congestion and costs, hosts all the major DeFi protocols. There is still considerable room for growth, however.
With more than 160 million unique Ethereum addresses, DeFi users represent only 2% of this base. But the entire DeFi market as a whole is growing despite this.
According to DeFi Pulse, nearly $70 billion in assets are committed to decentralized finance protocols. Several factors account for this DeFi trend and momentum, ConsenSys points out.
“The number of new addresses increased throughout the quarter as the community became more informed, user interfaces gained simplicity, returns were attractive, and awareness of DeFi best practices grew.”
In addition to ETH addresses, another metric thus measures the growth of the ecosystem and usage among crypto investors. That indicator is the supply of stablecoins, which are essential in DeFi.
The reactions of regulators, especially in Europe and the US, calling for a quick reaction to regulate stablecoins are a testament to this. The figures are enough to make you dizzy and worry the monetary authorities.
“The supply of stablecoins continued to grow at a rapid pace in the second quarter of 2021, now representing a total issuance of nearly US$65 billion, up more than 60% since the end of the first quarter of 2021,” the report measures.
Moreover, this stablecoin market is diversifying. At the end of the second quarter, Tether (USDT) accounted for 48% of the stablecoin market on Ethereum. Three months earlier, that share was about 58%. The use of alternatives to USDT is growing fast.