This Statistic Shows How Small Ethereum's DeFi Space Really Is

This Statistic Shows How Small Ethereum’s DeFi Space Really Is

Nick Chong

Last Updated: September 21, 2020 10:00 am

2 mins read

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

Ethereum’s decentralized finance space has seen parabolic growth since the start of 2020. In the past nine months, the value of coins locked in DeFi contracts has surged from around $500 million to $10 billion — a statistic that may actually undershoot true values.

Simultaneously, tokens pertaining to the DeFi space have seen a strong uptick in price action and volume. Some coins, including the famous LEND of the Aave protocol, have gained literally thousands of percent in the span of this year.

DeFI, though, remains relatively small on the scale of the crypto market.

An investor recently made a comment accentuating the relatively small size of this segment of Ethereum’s ecosystem, showing where it could grow towards in the coming months and years.

Ethereum Is Still Extremely Small, Even on a Crypto Scale

Accentuating how small the Ethereum DeFi space is relative to other cryptocurrencies and other markets, crypto trader Simone Conti commented:

“$LTC mkt cap is higher than the combined mkt cap of $YFI, $LEND, $UNI, $SNX. This is ridiculous.”

$LTC mkt cap is higher than the combined mkt cap of $YFI, $LEND, $UNI, $SNX. This is ridiculous.

— Simone Conti (@simoneconti_) September 20, 2020

That’s to say, some of the widely adopted cryptocurrency projects in existence currently have a less combined market capitalization that a single blockchain.

Conti isn’t the first to have harped on this trend, which shows how relatively small Ethereum’s applications are in terms of dollar value compared to legacy blockchains and projects.

Space to Grow

Many say that the aforementioned comparison, along with similar comments, shows how far Ethereum’s DeFi space has to grow moving forward.

Eric Conner, a prominent commentator and developer in the space commented earlier this year:

“The ghost chain reckoning is coming. There is well over $50bn in market cap value for chains no one uses. They will all be usurped by DeFi apps with actual use by the end of this market cycle.”

This was echoed by Jason Choi of the Spartan Group, who specifically targeted Bitcoin forks as a likely influx of capital for the DeFi space as investors seek greener pastures.

“I can’t find a defensible thesis for most $BTC forks (LTC, BCH, BSV) over the long term. With the emergence of fee-accruing tokens in DeFi, seems natural that capital parked in these glorified digital pet rocks either flow to BTC or to DeFi.”

I can’t find a defensible thesis for most $BTC forks (LTC, BCH, BSV) over the long term.

With the emergence of fee-accruing tokens in DeFi, seems natural that capital parked in these glorified digital pet rocks either flow to BTC or to DeFi.

— Jason Choi (@mrjasonchoi) July 23, 2020

The consensus among many investors in the space is that value will accrue in blockchains and protocols that have traction. And thus far, most of these protocols are focused on DeFi and based on Ethereum.