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Tech Deep Dives

According to CoinMarketCap: DeFi Edition

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Published on:
October 19, 2020

CoinMarketCap's Q3 report shows the state of the crypto world through our data-driven eyes — and surprise, suprise, it's all about DeFi.

Table of Contents

As the number one aggregator in cryptocurrency, CoinMarketCap is back again with another analysis of the cryptocurrency space from our eyes. This quarter, DeFi took the spotlight as both old projects and new projects in the sector saw some record-breaking gains, making DeFi the dominant conversation topic all quarter long. 


Below is a summary of some key pieces from our findings — for a look at the full report, you can download it here.


All About DeFi

Over the past few months of 2020, DeFi tokens experienced almost unprecedented growth up until September, when the crypto market as a whole felt a general pullback in prices. Despite the September ebb, several coins and tokens still have a large increase in their total market capitalization.



A different indicator of a project’s progress is return on investment, and Q3 saw more than one token with over 1,000% returns. 

Q3 Return on Investment

  1. yearn.finance (YFI) (+1,938.4%)
  2. xDai (STAKE) (+1,079.4%)
  3. JUST (JST) (+564.3%)
  4. Fantom (FTM) (+519.3%)
  5. Band Protocol (BAND) (+490.3%)

In general, DeFi projects outperformed the top 200 projects on CoinMarketCap (even including Bitcoin and Ethereum) by a large percentage ever since February 2020. Investors in DeFi projects have seen a maximum of a 30x increase since January 2020, and a 7x increase since the beginning of June


Ethereum, the go-to platform for the majority of DeFi protocols, has in comparison seen a return of 3.6x for investors since the beginning of the year — significantly less than the returns on DeFi projects themselves.

year to date performance
Year to Date Performance

CoinMarketCap users are still very interested in DeFi projects, despite the September slump — traffic for DeFi projects is much higher now than it was before June, showing that this recent downturn hasn’t strongly affected interest in DeFi.

weekly cmc data traffic
Weekly CMC Data Traffic

And in fact, even though this quarter saw the birth and subsequent growth of many “new” DeFi projects, projects launched before the explosive growth of COMP, “old” DeFi projects, appeared to have a stronger performance than new projects. This difference could be due to older projects’ stronger brand identity, or also the fact that many new projects required “old” DeFi tokens to participate in their liquidity mining/yield farming.

new defi vs old defi
Existing DeFi Projects vs. New DeFi Projects

More to DeFi Than Ethereum

When you hear “DeFi,” you usually think “Ethereum” — but according to our data, you’re only right part of the time. Other DeFi-compatible platforms like Kusama (KSM), Solana (SOL), Polkadot (DOT) and Waves saw a stronger price performance this quarter than Ethereum (and EOS and Stellar (XLM) underperformed in comparison).

platform projects comparison
Platform Projects Comparison

Crypto! Crypto! Read All About It

With the launch of CoinMarketCap’s crypto news aggregator Headlines in July, we’ve tracked the articles that were the most viewed. It turns out that our readers are just as into reading about DeFi as they are into looking at DeFi CMC data. Of the top 10 most viewed headlines, six were about DeFi, ranging from dives into liquidity on Uniswap to the dangers of locking value in yield farming.


Bitcoin’s Mid-Year Journey

With all of the DeFi hype in the space, we haven’t forgotten about Bitcoin. The top crypto asset ended Q3 with the longest run it has ever had over the $10,000 price point (so often referred to as the “psychological price point”). During the quarter, Bitcoin saw a rise of 15.1% — and since the beginning of the year, Bitcoin rose from about $7,200 to its current price, a 47.5% increase.


However, Bitcoin’s dominance has fallen from where it normally lives over 60% — at the end of the quarter, BTC dominance is hovering around 58.1%. This decrease could be attributed to the strong performance of DeFi altcoins (and other, non-DeFi altcoins) in both Q2 and Q3.

bitcoin price and dominance
Bitcoin Price and Dominance

The Future of DeFi — Final Thoughts and Associated Risks

The explosive growth of the DeFi narrative over the past quarter has eclipsed most other parts of the cryptocurrency space — which has worried some as September brought about a general slump in the DeFi markets. However, by tracking the prices of projects and their traffic, CoinMarketCap data shows that even when DeFi took a hit, the interest (aka traffic) in DeFi from the public is still there.


While DeFi earned a lot of people a lot of money this quarter, it also brought to the forefront some key risks, namely those associated with tokenomics, smart contracts and “rug pulls.” In simplest terms — know the release and distribution schedule for DeFi (or any kind, really) cryptoassets, understand that smart contracts are not infallible and be aware of malicious intent. Both rookie and seasoned investors should have some understanding of these concepts before they start investing and interacting with DeFi platforms. 


It remains to be seen if DeFi will continue to be relevant in the months to come (or if something new, like decentralized storage, could come in and steal the spotlight). However, the data tells us that we can remain cautiously optimistic that DeFi innovation has the chance to disrupt traditional finance and move us further towards a more decentralized world.


Author(s)

Kai Wu

Always looking to connect the dots and find patterns in data that enable me to tell a compelling, problem-solving story.

Gerald Chee

I'm way more interested in liquidity than the average person.

Molly Jane Zuckerman

I write almost exclusively about cryptocurrency and Russia — I like talking with people about technologies and politics.

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