The highlights of DeFi’s first quarter 2022
Today we’ll look at
Several #’s and metrics around DeFi
The biggest stories and narratives in Q1
Some things I’m paying attention to next in Q2
Cryptocurrency Inflow
There won’t be another bull market until the $ inflow increases. How do you monitor this?
Observing the volume of Cryptocurrency exchanges
Observe the total market cap of the entire space.
The amount of money coming in has lowered in Q1.
The Numbers in DeFi.
TVL (Total value locked) in DeFi is down by $24B (-8.7%)
Some large protocols’ monthly DeFi income has decreased.
The TVL across all chains fell in January, but it has been steadily rising since March.
The Effect of Macro Forces The two biggest factors:
The Russian / Ukraine War
The US Federal government is increasing interest rates.
The stock market has also taken a hit.
I’m astounded by how durable DeFi and Crypto have become in the face of macro pressures.
Comparing the TVL of Different Chains
Let’s look at how the different chains compared. The most drastic:
Ethereum: -7.93% (Keep in mind some went to L2s)
Terra: +4.95%
@Osmosiszone and @Cronos_chain each DOUBLED their TVL despite the dip.
The Stories of Quarter 1
The first quarter was a chaotic rollercoaster ride full of ups and downs. It wouldn’t be DeFi without escapades and drama. Let’s take a look at some of the recent news that have had an impact on DeFi.
Ethereum Layer 2s Heating Up
The TVL of Ethereum Layer 2s keeps increasing.
@Arbitrum is leading the way
@MetisDAO is building its ecosystem
@starkwareltd is coming. Starkware is a BIG deal.
Terra Luna Defies the Market
Luna broke all-time highs during the dip.
The @lfg_org added $450 million to the @anchor protocol reserves in order to maintain the 19.5 percent APY.
The @lfg_org committed to buying $10b worth of Bitcoin to help defend the $UST peg.
AVAX
AVAX released subnets to increase scaling
@defikingdoms expanded to AVAX with Crystalvale using AVAX subnet.
Terra just bought $200m worth of AVAX.
@Platypusdefi the stable coin swap of AVAX hit $1B TVL
Liquid staking via sAVAX
Solana
I haven’t paid too much attention because the DeFi stuff isn’t interesting. There are two tailwinds for @solana:
@Opensea is integrating Solana NFT’s
@auroryproject is a hyped gaming project set to release.
Cosmos
The Gravity Bridge, which connects COSMOS with ETH, has been launched.
They’re unveiling interchain security, which will allow younger blockchains to build security from the ground up.
The value of the ATOM token will increase. Staking ATOM will allow you to get prizes from many chains.
Frog Nation Falls
Dani & Frog Nation was the hottest thing in Q1.
They engineered a takeover of @SushiSwap
Everything crashed when the identity of Sifu was discovered to be Michael Patryn (Serial scammer)
The Aftermath of Sifugate
Spell and Ice’s prices have plummeted.
Sifu was evicted from Wonderland via popular vote. Sifu has begun a new procedure.
Dani is concentrating on reconstructing Wonderland. A few weeks ago, several folks chose to “ragequit.”
Rebasing Projects
Rebasing projects were all the rage in Q1 and most of them have kinda died out.
2 exceptions:
@olympusdao is still building out products
@redactedcartel has formed several strong partnerships including 1 with @terra_money
Node Projects
Because of the promise of passive revenue, nodes have grown in popularity. After the rebasing initiatives faded out, many of the same people moved over to nodes. They’re divisive, with many people accusing them of being ponzi schemes. The top node project prices have plummeted.
SOLIDLY ve(3,3) Flops
The most anticipated event in Q1 was without a doubt. Millions of dollars were transferred to FTM by investors hoping to gain a piece of SOLID NFTs. SOLIDY failed due to a poor debut and the absence of its creator.
Andre Cronje Leaves DeFi
Andre was DeFi’s most well-known coder. He made an abrupt statement and exited the room. His projects are being handed up to other teams. You can see the effect he had on the $FTM pricing.
FAAS
Farming as a Service is a new industry that aims to assist individuals with farming. Let’s watch how they fare when the bull shows up.
Major Players:@ReimaginedFi,@alphacap_io,@schaincapital(Wolf Ventures),@expo_capital
Crosschain Bridge Exploits
Wormhole bridge was sold for $325 million. Jump Crypto paid the cost.
The Ronin bridge was abused for $625 million. They’re still trying to figure out what to do.
Vitalik gained everyone’s trust by exploiting the weakness of cross-chain bridges.
NFTs
@yugalabs acquires Cryptopunks
@Gamestop is launching an NFT marketplace soon
@yugalabs raises $450m for a metaverse project
@Azukiofficial reached blue-chip NFT status within months
I’m not familiar with NFTs but their success will onboard more normies.
I’m missing a ton of narratives. (perps, metaverse, etc) I’m doing my best to keep up, but it has grown too large for me to cover everything.
Takeaways:
TVL and Inflows were down this quarter due to large macro forces. I’m impressed with how resilient crypto has been.
One way to profit is to understand the different metagame and narratives.
You can look at #’s to see which chains are gaining momentum.
I hope you’ve found this blog post helpful!