DeFi will have bigger impact than ICO boom

  • Ethereum’s DeFi sector continues to grow despite the stagnant price of ETH. The total value locked in the Ethereum DeFi sector stands at $1 trillion and has recovered by almost 80% after its March 2020 drop.
  • According to Chris Burniske the emergence of the DeFi could have a bigger impact on Ethereum (ETH), than the ICO boom in 2017.

In recent months, Ethereum price has managed to recover from the drop it experienced on the “Black Thursday” in March. At that time, the market collapsed due to the effect of the coronavirus pandemic. However, ETH has been able to return to its levels before the drop. At the time of publication, the price of ETH  was at $234 with gains of 4.27% in the last 24 hours and 16.50% in the last 30 days.

In spite of this in the last few weeks ETH has been unable to stay above the important barrier of $240. Something similar has happened with Bitcoin as it has been rejected on multiple occasions after passing $10,000. Ethereum’s DeFi sector, however, has shown that it can grow even if the price of ETH remains stagnant.

Ethereum’s DeFi sector continues to grow

According to DeFi Pulse, the total blocked value (TVL) in the DeFi sector amounts to 1.01 billion dollars at the time of publication. As can be seen from the chart below, the TVL has been recovering steadily since the “Black Thursday” in March and is well on its way to reach its pre-crash level.

Ethereum ETH

Source: https://defipulse.com/

At the same time, the data show that the entire DeFi sector has grown by about 300% in terms of capitalization, while the market capitalization of the crypto market has only increased by 100% in the last year. In total, 2.25% of the total Ethereum supply is locked up in all DeFi applications. In this respect, Maker still dominates the sector with 48.15% and a locked-up amount of 485 million dollars.

A further sign of growth is evident from the data of Dune Analytics. The analysis company stated that the number of active users in the DeFi sector has grown exponentially over the years. As can be seen from the chart below, the number of users is close to 200,000, an increase of 100% from December 2019.

Ethereum ETH

Source: https://www.duneanalytics.com/

As CNF reported, the growth of this sector has not gone unnoticed. Chris Burniske, a partner in the venture capital firm Placeholder, predicted that the next cycle of Bitcoin and Ethereum will be bigger than the 2017 boom, which in the case of Ethereum was driven by the ICO bubble. At that time, BTC and ETH reached their all-time high of 20,000 and 1,400 dollars respectively. Burniske expects BTC to rise to $50,000 this time and ETH to $7,500. With this in mind, Burniske said that the next cycle will be different from the one caused by the ICO bubble:

Not the ICO bubble, but another capital formation bubble will happen, standardized by code and legal as w/ ERC20.

Finally, the data from Nyctale also shows a mixed reality in Ethereum’s DeFi sector. The degree of centralization continues to increase and is reflected in the number of addresses that the most important protocol tokens accumulate in the DeFi sector. The whales in this sector own most of the supply from Chainlink, MakerDAO, Ox Protocol, Kyber and Bancor. This is particularly negative for governance tokens, but it is positive for operators because it reduces the selling pressure in the marketplace.


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