The blockchain-based decentralized applications (dApps) ecosystem appears to have experienced significant growth during Q2 2020. As expected, most of the development involved decentralized finance (DeFi) apps running on Ethereum (ETH), the world’s largest smart contract platform.
Decentralized (or non-custodial) crypto exchanges (DEXs) led the way as Compound’s COMP token mining activity really took off, which led to a considerable increase in the use of on-chain swapping solutions.
Our Network data shows that Curve was among the biggest beneficiaries of yield farming as it assisted traders with switching between various stablecoins (digital assets pegged or backed by real-world currencies or commodities), in order to maximize returns.
Curve serves as an automated money market that can only support swaps between different stablecoins and “wrapped” cryptocurrency tokens. Curve can offer more competitive slippage and lower fees for trading virtual assets.
Deposits made on Curve increased by nearly 3x last month, meanwhile, daily trading volume reached a high of $60 million – which is notably 30x greater than the platform’s previous trading volume average.
The overall demand for Tether’s USDT stablecoin pairs was also the highest in June 2020. The USDT-pair trading market accounted for over 58.5% of total crypto trading volume. This was likely due to USDT being able to consistently generate some of the highest COMP yields.
Leading non-custodial exchange Uniswap also saw increased activity because of a dramatic rise in Compound’s COMP token trading volumes. Notably, the monthly trading volume via Uniswap was around 2x greater than previous months.
Kyber Network, which connects fragmented tokenized assets by facilitating seamless transactions, and decentralized exchange protocol 0x also reported increased activity.
The increase in overall DeFi may have caused a decline in gaming activity last month, according to a Q2 2020 market report from DappRadar. More than $8 billion worth of trades took place via DeFi platforms during Q2 2020, which caused gas prices to rise significantly.
Ethereum’s (ETH) gaming dApp ecosystem experienced a 79% decline in overall on-chain activity during Q2 2020 (when compared to the previous quarter).
In addition to an increase in trading activity, several new DeFi solutions have been launched.
Ethereum based 0x, a protocol for developing non-custodial trading infrastructure, introduced a liquidity aggregator for digital asset traders.
Bitcoin expert Andreas Antonopoulos, who has mainly supported BTC focused developments, has now acknowledged that Ethereum-based DeFi protocols can be used to earn passive income.
Lex Sokolin from ConsenSys also took a detailed look into what happened when DeFi protocol Compound’s balance sheet increased by over $500 million in June 2020.
While the DeFi ecosystem attracted considerably more users last month, it’s far from perfect.
Balancer, a “decentralized” finance protocol, was basically forced to conduct votes to implement a quick codebase change to prevent large players from “gaming” the platform.