Activity on Ethereum DeFi is Slowing – Yet Innovation Continues

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  • Prices of Ethereum and leading DeFi tokens continue to plummet as activity on DeFi’s main chain is stalling.
  • Despite the bearish sentiment, countless DeFi innovations are poised to come out.
  • DeFi continues to onboard new users, though at a slower pace.

The GameStop saga illuminated numerous atrocious aspects of the contemporary financial system, resulting in driving hordes of new investors and traders towards the open and decentralized financial ecosystem of DeFi. This, along with several other reasons, triggered a surge in DeFi adoption and a burst in activity on DeFi’s main chain.

However, with recent events putting the entire crypto market under extreme pressure, activity on DeFi has also stalled. As a consequence, prices of Ethereum and leading DeFi tokens have plummeted to unseen lows, with some losing more than 70% of their value.

At press time, Ethereum is trading at around $1,930, down by more than 50% from it’s all-time high, per data from Coinmarketcap. Other leading DeFi tokens have also followed suit. Synthetix (SNX), for instance, is currently trading at around $6.6, down by more than 70% from its relative high of $24 around mid-May.

Nevertheless, the lack of activity on DeFi has reduced gas prices to levels last seen in summer 2020. During the last couple of months, the average gas fee on DeFi has been more than 100 Gwei. However, now a trader can even break free with a single-digit Gwei gas fee during off-hours.

Innovations on DeFi Continue

Despite the dormant activity period in DeFi, more products and innovations than ever are coming out. The major reason is that many project’s development cycles are near to fruition, which typically includes 3-12 month dev cycles.

Thus, starting today, each week we will witness the launch of new projects, major updates, and significant ecosystem-changing events. Some of the more prominent innovations to look for include:

  • Cozy Finance, a DeFi risk management startup, unveils its protected yield product.
  • Volmex Finance, a tokenized volatility protocol, uncovers its volatility products.
  • Ribbon Finance, a company focused on creating crypto structured products on DeFi, adds a liquidity mining program.

DeFi Resumes Pushing On

Among all the bearish sentiment, DeFi carries on with onboarding new users — though at a slower pace. DeFi’s month-over-month growth in April was 18%, which increased to 25% in May. However, this month, user growth is estimated to be ~12%. With this pace, it won’t take much until DeFi users (unique addresses) estimate reach 3 million.

As Mark Cuban had previously asserted, DeFi has “the potential to explode in the next 10 years.” While DeFi may gain unbounded mainstream adoption within the next few years, it is for certain that “there will be a lot of ups and downs along the way.”