DeFi activity on Ethereum network continues to drop- Here’s why

Ethereum Defi go to downtrend

According to data from DefiLlama, the total value locked (TVL) for all decentralized finance (DeFi) protocols located in different chains is $59.18 billion. Affected by the general decline of the crypto market, TVL in the DeFi ecosystem has dropped by 65%.

Built on the Ethereum network, MakerDAO, with a TVL of $7.94 billion, accounts for a 13.42% share of the entire DeFi market. This is regardless of the fact that the TVL of the protocol has also decreased by more than 120% since the year it started.

As of now, the TVL of DeFi protocols built on the Ethereum network stands at $34.23 billion. With the rest of the market recording a consistent decline since the year it started, how have DeFi activities in the Ethereum network been impacted specifically?
Lord of Decline

Although the Ethereum chain has the highest TVL of all the networks in the DeFi ecosystem, the TVL on the network has dropped over 185% in the past nine months.



At the beginning of the year, the TVL for protocols in the Ethereum network was at $98.81 billion, data from DefiLlama shows.

Source: DefiLlama

For Ethereum-based decentralized exchanges (DEXes), as of the time of this writing, TVL is pegged at $13.94 billion. Due to the “extreme market conditions” that the crypto market as a whole has witnessed since the year it started, TVLs for DEXes on Ethereum have dropped by more than 69%.

Data from OKLink reveals that these protocols have recorded a consistent decline in daily trading volume since May.

As of September 3, trading volume daily for DEXs built on the Ethereum chain is $931 million, which is down 96% in just four months. This shows that as the overall market continues to decline, fewer people are engaging in DEX usage.

Source: OKLink

In addition to the drop in daily trading volume, the daily active users of the DEX on the Ethereum chain have also decreased.
Interestingly, this drop started in May 2021, in the midst of the crypto market bull run.

As of September 3, 7532 users used Ethereum DEXes. This represents a 93% drop from 124,050 daily users logged in on May 9, 2021.

Source: OKLink

As for daily revenue on the Ethereum network, there has been a consistent decline since May 2.

According to data from Token Terminal, daily revenue on Ethereum has decreased by 74.6% in 180 days. via.

Furthermore, in the past month, this number has decreased by another 16%.

Source: Token Terminal

With the continued growth in the number of Layer 2 scaling solutions and the gradual decline in transactions processed on Ethereum, revenue is likely to decline even more.


Sep 05, 2022

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