A decentralized protocol can offer many financial services. Apart from exchanging cryptocurrencies, users can conduct lending and borrowing, staking, liquidity provision, yield farming, etc.
Some concepts are well known, such as liquidity provision, which market makers have traditionally conducted, or lending and borrowing, which banks have conducted on traditional markets. With these DeFi protocols, users can provide liquidity in both cases by pooling their assets in a smart contract providing financial service to others.
According to The Block, DeFi exchanges surpassed the $1 trillion trading volume in 2021. This remains a small part of the overall trading volume in crypto ($16 trillion). Still, they have outpaced the volume growth of traditional crypto exchanges, thereby increasing their market share for the second year in a row.
The biggest decentralized exchange is Uniswap, with a seven-day transaction volume of over $11 billion. Uniswap has more than 78% market share of DEX volume on Ethereum. There are other notable exchanges on different blockchains, such as PancakeSwap on the Binance Smart Chain. Still, none came close to the DeFi volume and relevance of the Ethereum Ecosystem in the past.
Decentralized lending and borrowing protocols attempt to eliminate banks as middlemen in the traditional lending business. According to Dune Analytics, the set of the largest three lending and borrowing protocols on Ethereum have an outstanding loan volume of approximately $16 billion. Compared to the global lending market of $6.9 trillion, this number is still comparably small and leaves room for growth.
About Chainerist
Chainerist aims as an enterprise blockchain solutions provider, transforms digital trade & economy into a blockchain powered ecosystem. By knowing the potential of new emerging technologies such as DeFi, DAO, Launchpad, Custody Services, Metaverse, NFT/DDC (Distributed Digital Certificate), CBDC (Central Bank Digital Currency), BSN Spartan Network etc.
We care deeply about our clients and look beyond their immediate needs, championing the goals that inspire them. Working with us is always a transformational experience; that’s because the best outcomes are often the hardest to achieve, and often bring the kind of value that goes beyond what was first imagined.