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DeFi projects will form the foundation of the crypto economy in 2021 according to a report by DappRadar.
DApp transaction volume has topped $270 billion so far in 2020, with 95% of this figure belonging to Ethereumâs DeFi ecosystem, according to DappRadar. Thatâs an astonishing 1178% increase from last yearâs total of $21 billion.
The blockchain data provider revealed the figures in its annual DApp Industry Report today, summarizing the highlights and failures of a record-breaking year for DApp-based economics.
The report noted that money has been flowing from BTC to ETH throughout the year, resulting in a rise in the price of ETH, from 0.018 BTC on Jan 1. 2020 to its current price of 0.028 BTC.
DappRadar speculates that attractive yields in DeFi were the âmain trigger of Bitcoin flowing to Ethereum,â with Wrapped Bitcoin (wBTC) and RenVMâs renBTC playing crucial roles in tapping Bitcoinâs vast reserves of liquidity for DApps.
2020 was a record year for the #blockchain industry:Dapp transaction volumes surpassed $270B with 95% accounted for by #Ethereumâs DeFi ecosystem.#NFT marketplaces demonstrated their potential with multiple sales worth more than $100,000.Read moreâŹïžhttps://t.co/Y4ya8qiIPO
â DappRadar (@DappRadar) December 17, 2020
Describing 2020 as the âyear that DApps tried to grow at all costs,â the report found that just 10 DeFi DApps accounted for 87% of Ethereumâs total transaction volume.
Those 10 DApps totaled over one million active users in November, with the top three â DeFi Swap (Crypto.com), Uniswap, and Compound â dominating the total with 930,000 between them.
The report noted that the limitations of Ethereum became apparent this year as the network âeffectively hit a wall in regards to scalabilityâ with average gas prices several times higher than last year.
Congestion on the network accelerated the rise of competitors during the second half of the year, with DApp-friendly platforms like Binance Smart Chain, Tron, and Wax accounting for a rapidly increasing share of total DApp transaction value.
Also on the rise is the severity of hacks and exploits of unaudited or improperly audited smart contracts used by DeFi projects. DappRadar estimates that more than $120 million was stolen across 12 major incidents in 2020. It predicted that "insurance will be the next important DeFi ecosystem subcategory,â as a result.
While itâs garnered a lot of attention lately the âNFT Marketplacesâ category exhibited only moderate growth across the year. The âGamesâ category remained flat and the âGamblingâ category ended slightly down.
The DappRadar report concluded that COVID-19 has actually served to strengthen DApp ecosystems by encouraging their use as problem-solving measures:
âIt would appear the global pandemic brought increased attention to decentralized solutions as conversations deepened around the distribution of a basic universal income and worldwide database management systems.â
Looking forward, DappRadar predicted that DeFi will play âan even more influential roleâ in 2021 and âform the foundation of the crypto economyâ across all sectors, including NFTs, games, logistics, and other DApp categories.
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