With the upward trend of the digital currency market, the field of decentralized finance or defai continues to grow and we are witnessing the increasing expansion of difai in different blockchains. At present, the total value of Locked (TVL) on various Difai platforms has reached more than $ 200 billion. Since the beginning of August, TVL total blockchain has grown by about 84%. The Solana and Olench Blockchainks have contributed the most to this growth, and the total value locked in the two Blockchainks has risen from tens of millions of dollars to billions of dollars.
However, the important question that arises is whether the increase in TVL in Difai means the entry of money into this field? Not necessarily!
It is true that the criterion of total locked value is the most important factor in assessing defae status, but it does not provide comprehensive information on the amount of assets invested in this area. TVL is completely dependent on locked assets, thus offering a false view of the value of the defense.
For example, a person may deposit some ether to receive a loan from the Aave platform and receive a tether. It then switches the tether to an Uniswap and buys ether with it, transfers the purchased ether to the Curve platform, and re-deposits it. The repurchase of purchased ethers may indicate a high TVL rate, which in practice is not the case. So the question is, how should the real value of Difai and its growth rate be measured? If we are not going to trust TVL, what alternative criteria should we use? Continue to help an article In dappradar we will examine this issue.
Liquidity inflow to Defai
Ethereum Blockchain is the leading platform in the field of defense. The total value locked in Difai platforms on the Ethereum platform is more than $ 110 billion, which is more than half of the total Difai market. Therefore, our main focus will be on the defense field in the Ethereum Blockchain. Also, as mentioned in the previous section, we will not consider TVL as the primary criterion for assessing DIFI value in Ethereum, but will instead rely on offering specific tokens locked in DIFI protocols.
The first thing we look at is the recent increase in the supply of wrapped ether tokens, or WETH. While TVL varies depending on the price of ether, the amount of WETH supply directly indicates an increase in Defy value. From July 2020 to May 2021 (July 99 to May 1400), WETH supply has increased at a fixed rate, which indicates the growth of DIFA. The growing number of WETH pairs, which is the bridge between Ethereum and other chains, as well as the main tool for trading counterfeit tokens, has continued the uptrend scenario.
But from May to July 2021 (May to July 1400) we have seen a downward trend in WETH supply. But after July, the trend has risen again. In general, the increase in WETH supply in the field of diff in the Ethereum bed indicates an increase in the value of diff.
To validate this idea, we turn our attention to the stable coins. Stable coins have many applications in the defense space and are used as a tool for risk management. While these traders’ interest rates on Diffay deposits are not attractive to many traders, working with stable coins significantly reduces the likelihood of losing assets (such as the liquidation of collateral in the Maker Protocol).
We will analyze the supply of the most important stable coins in the field of defense in the Ethereum space to see if increasing the supply of stable coins in this area will increase the value of defense or vice versa. It is worth noting that USDC, Tetra and Dai tokens are most used in Difai space in the Ethereum blockchain.
In the chart below, we see a significant increase in the supply of stable coins in the first quarter of 2021. In the case of Tetra and Dai, we see irregularly curved behavior, but this behavior is somewhat consistent with the delivery of WETH tokens over the same time period. But in the case of the USDC, supply has declined significantly. The difference between the USDC to Tetra and Dai tokens may be due to the faster growth of Defai in the Solana and Olench china blocks. Graphs can show changes and displacements of diff value between different strata blocks, but in general they show the growth of total diff space.
For example, looking at the changes in the Tetra supply in the various Dappa-related Dapps in the Ethereum Blockchain, we can conclude that the Tetra supply has changed in each of the Dapps, but the Tetra tokens remain in the Defai space as a whole and from only one protocol. Defy has been transferred to another.
In addition to stable coins and WETH tokens, a review of native tokens from various Diffie protocols such as Avi, Ion and Sushi also shows that the supply of these tokens has been almost constant since the second quarter of 2021. This is further evidence of the fact that in recent months, significant value has not gone beyond the scope of defense.
Market for unparalleled tokens and Blockchain games
While the Difai market appears to be strong enough and will not lose value in the short term, some of this value may be transferred to other parallel Diffie categories such as NFTs and Blockchain games. In August, we saw record-breaking tokens in the record, with more than $ 5.2 billion in NFT trades in one month, 90 percent of which were Ethereum. The largest market for unique tokens in the Ethereum Blockchain is OpenSea, which we will examine in more detail below.
The market for unparalleled open C tokens
The OpenC market allows its users to use different currencies such as Ether, Dai, Metic, WETH and USDC to trade NFTs. But more than 99.7% of users trade with Ether or Rapid Ether.
In addition, by examining the number of Ether, Rapid Ether and USDC tokens traded in the OpenC market in 2021, we will see a significant increase in these tokens in the Open.
In fact, the rate of use of two ether tokens and Rapid Ether in the space of non-analog tokens is very high. On the other hand, the downward trend of Defai market in May coincides with the beginning of the upward trend of the market of unparalleled tokens. In fact, in May, some of the assets were transferred from Defai to NFT, boosting the NFT market. However, this is not true of the dramatic growth of the NFT market in August. Because at that time, the supply of ether in these two markets was increasing simultaneously and both markets have grown in parallel. For this reason, it can be said that the growth of these two markets in August was a natural growth.
In addition, by looking at past trends, an interesting pattern can be identified. In late May (early June), the number of transactions related to defa suddenly decreased and the number of transactions related to NFT and Blockchain games increased dramatically. Although the amount of tokens offered does not seem to have changed much at the time, this trend indicates that part of the assets have been transferred from the Defai domain to the NFT and game domains.
Thus, although part of the value is being transferred from Difai to the NFT market, both markets are generating value independently. Examining the amount of ethers circulating in the open C market, we find that the value produced in the NFT market is largely natural. In the Difai market, the supply of native tokens of Difai protocols has not decreased, but the supply of ether in Difai has been somewhat reduced, and this position can be a sign of further growth of the market of unique tokens.
Overall, Defy’s value appears to be steadily rising, while NFTs were able to grow faster in August. In the following, we will examine another category of applications of Blockchain platforms that have experienced good growth in recent months; Blockchain games.
As with NFTs, blockchain-based games have been a huge success in recent months. The use of blockchain in the gaming industry has expanded, especially in the category of “gaming for money” or P2E for short. To review this section, we will focus only on the popular Axie Infinity game.
All ERC20 and ERC721 Oxy tokens are hosted on the Ronin sidechain. Therefore, to play the game, ERC20 tokens must be transferred to the Ronin side chain via intermediaries (Bridge). By analyzing ether inputs through ronin, we can calculate the net value transfer to the oxyinfinity ecosystem.
If the amount of net ether input is positive, it can be concluded that the number of ethers to be tokenized in the ronin side china is greater than the amount of ethers released from the side china. Currently, this criterion is positive and more ether tokens enter the Oxy game. This is not surprising, as Oxy Infiniti is currently the most popular game in the Blockchain industry, with more than 1.5 million daily active users, and since June (June) more than any Blockchain has earned (not profits) its users. has done.
The analysis of the criteria related to Oxy Infinity game clearly shows the value created by this decentralized program. Since May, 5.1 million Oxy traders have made more than 9.3 million transactions, bringing the value of these transactions to more than $ 2.15 billion.
In recent months, the market for NFTs and Blockchain games has grown significantly, but the growth of games and NFTs has not prevented the advancement of defy protocols, and this area has continued to grow gradually. This is evidenced by the increase in the supply of native portfolio tokens, WETH tokens, as well as stable coins such as Dai, Tetra and USDC.
In addition, the amount of value generated in the non-recurring tokens market, especially in the open market, indicates that the investment style of some market participants has changed and some of them prefer to store their NFT assets to invest in ether tokens.
A similar thing has happened in Blockchain games, and Oxy Infiniti has seen astonishing growth. This growth has been so great that it creates the impression that part of its input has left Defy protocols and entered the gaming industry. But a separate study of the two markets shows that Blockchain games are generating value on their own, and that their growth is not due to the transfer of cash flow from Defai to the gaming industry.