Hello Defiers! Here’s what’s going on in DeFi:
Ethereum addresses cross 100M
Whale causing Dai rollercoaster in lending protocols
Opium launches options market for unlisted governance tokens
Loopring’s payments solution
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Ethereum Addresses Crossed 100 Million
Total Ethereum addresses just crossed 100 million. Even when slicing that number up to account for actual activity, all metrics point to accelerating growth and adoption that’s beating even early internet use.
This is relevant for DeFi, because what’s the use of rebuilding the financial system if no-one is there to use it? Since most of DeFi is built on Ethereum, the number of people using the Ethereum network is a key metric to gauge how big open finance can actually get.
There are different ways to measure Ethereum use —total addresses, transactions per day, new addresses per day, etc. The most recent milestone was in in total cumulative unique Ethereum addresses crossing 100 million.
Image source: Etherscan
But it needs to be taken with a grain of salt, as one person can have multiple addresses, some of them long forgotten, and in other cases, they could have been created automatically by trading bots.
Total Ethereum addresses with non-zero balance is a good metric to add context, as it signals actual use, and this number is approaching 40 million. The daily growth of this metric is accelerating, with new Ethereum addresses holding ETH just crossing 100k, according to Glassnode, the highest since March 2018 using a 30-day average.
Image source: Glassnode
Daily active addresses are also climbing. They spiked near 400k last week, while the 14-day average is at more than 340k, the highest since August 2018. Glassnode counts this metric as addresses which either sent or received funds, successfully.
Still, this shows the number of addresses merely holding ETH (40 million) is more than 100 times larger than addresses actually doing something with that ETH.
With a rising number of active addresses, it makes sense that there’s also a rising number of daily transactions. The Ethereum network is just shy of reaching 1 million transactions per day, the highest in almost a year, according to CoinMetrics. For reference, Bitcoin handles about 300k daily transactions.
Image source: CoinMetrics
Smoothing out sharp spikes with the 7-day moving average, the only two times transactions have climbed to these levels were in June 2019 and at the peak of the latest crypto bubble, when they touched a high of 1.2 million in January 2018.
Summarizing, here’s a glimpse of DeFi’s addressable market on the Ethereum network:
100 million total Ethereum addresses
40 million total addresses holding ETH (growing at 100k/day)
400k daily active Ethereum addresses
So what chunk of that is DeFi currently taking? Richard Chen of 1confirmation added cumulative users for major DeFi platforms using Dune Analytics data, and he arrived at almost 200k total DeFi users over time.
Image source: Richard Chen & Dune Analytics
The numbers show there’s still ample room for decentralized finance to grow just within its natural playground of Ethereum users. In other words, Ethereum adoption isn’t limiting DeFi adoption yet as it’s only attracted a sliver of that market.
Ethereum adoption itself has a lot of room to grow. Its 40 million addresses holding ETH compare with more than 60 million Bank of America accounts. And that’s just one US bank, while Ethereum wants to become a global settlement platform.
But the network is off to a great start. Ethereum users have already surpassed total early internet users, with 100 million addresses six years since its launch in 2015. There were 16 million total internet users in 1995, six years after the World Wide Web was founded in 1989, according to Internet World Stats. Even taking the more conservative metric of 40 million addresses holding ETH, Ethereum is beating early internet adoption.
It’s only been six years and we have a budding, emerging, innovative financial system. Imagine what the next six years will look like.
Whale Causes Dai in Aave to Temporarily 2x Overnight
There’s a whale lurking in DeFi waters and its latest move caused Dai locked in decentralized lending protocol Aave to more than double overnight — and then lose it all, highlighting the ecosystem reliance on large traders.
Image source: DeFi Pulse
The anonymous investor pushed Dai locked in the the lending protocol to 4M on Monday, up from 2M a day earlier, and then back to 2M this morning. Aave sits at 4 on the DeFi Pulse leaderboard. The protocol holds ~$79M in total deposits, which are mostly made up of ETH.
Making Waves at Compound
The Dai spike was driven by the same account responsible for adding 10M in DAI to Compound last week, which it has also withdrawn. Many presumed the trader is “COMP farming” – or adding liquidity to be eligible for Compound’s governance token distribution in early July.
As for the Aave deposit, the platform’s CEO Stani Kulechov told The Defiant higher rates are driving savers. “Aave has become battletested and the rates have been competitive enough to drive more depositors as we have seen with the recent spike on Dai deposits,” he said.
Building on the notion of composability, the liquidity for these DAI deposits stems from Maker Vault #9431 – the second-largest Vault on the market, according to data firm Nansen, with 130,000ETH locked (~$31.5M) at the time of writing.
Unlike other Vault owners using newly minted Dai as leverage to purchase more ETH, this trader temporarily leveraged ETH to gain interest on their Dai and to access Compound’s COMP governance token. The former is a safer bet than buying more volatile tokens, while the latter is arguably the riskier long-term bet on governance tokens, as COMP currently holds no economic value.
The recent surge shows that despite a 0% Dai Savings Rate, the DeFi stablecoin market is booming, and the addition of new collateral will likely continue driving supply of the sector-preferred stablecoin to new highs in coming months.
DeFi Traders Can Now Access Tokens Before They list
Opium.exchange launched options markets for users to assign a value to governance tokens like Balancer’s BAL and Compound’s COMP before they start trading in secondary markets. The contracts are European style, which means that can’t be redeemed prior to maturity.
We are very excited to announce PRE-MARKET for $BAL tokens of @BalancerLabs
First time in #DeFi
a fabulous instrument that used historically as a smart way to create a secondary market or avoid investment obstacles
Introducing first ZEPO: pre-market for $BAL token is live!Pre-trade on any market with ZEPO via Opium Exchangemedium.com
June 8th 2020
3 Retweets15 Likes
By using ZEPOs, Opium can offer tokens which mimic the price of an underlying asset as a call option with a strike price of zero. In the case of BAL, one ZEPO equals 10 BAL, meaning each trade entitles the buyer to 10 BAL worth of stablecoins (likely DAI or USDC) upon settlement on July 1st. ZEPO is cash-settled, which means delivery is made in stablecoins, rather than in BAL. While the market is still illiquid, it will be a useful tool to gauge how traders are pricing Balancer’s tokens and others in the future.
Loopring Launches Fast and Instant Payments
There’s a new, free and fast payments system on Ethereum. Loopring Protocol on Friday added zkRollups-based payments functionality to the Loopring.io frontend, so users can send payments to each other instantly and for free — no fees or gas.
Solutions like these are especially useful at time when gas prices on Ethereum as climbing due to increased use. Other wallets and apps will able to use Loopring protocol or APIs to enable Ethereum-based payments.
zkRollup is a Layer 2 solution which enables fast processing times by taking transactions off the main Ethereum chain, while allowing users to retain custody of their funds.
Loopring recently launched a decentralized exchange based on the same scaling technology, which the team says increased throughput by 1000x while lowering costs. The DEX has settled over 1 million trades in its first 3 months.
Privacy-focused browser Brave was found to autocomplete several websites and keywords in its address bar with an affiliate code. Brave CEO and co-founder Brendan Eich addressed the incident and called it “a mistake we’re correcting.”
Glassnode says Ethereum network fees surpassed Bitcoin’s
Daily #Ethereum network fees surpassed #Bitcoin fees yesterday. Ethereum fees: $498k
Bitcoin fees: $308k So far, this has only happened on 141 days (8%). Compare here:
June 7th 2020
56 Retweets213 Likes
The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Sign up to learn more and keep up on the latest, most interesting developments. Subscribers get full access at $10/month or $100/year, while free signups get only part of the content.
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About the founder: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.