What conclusions can we draw from analyzing 200 top DeFi protocols?

Original Title: "What Insights Can We Gain from Analyzing the Top 200 DeFi Protocols?"

Original Author: Ren & Heinrich

Translated by: Deep Tide TechFlow

In this article, I will share insights gained from analyzing 200 top DeFi projects. This is not an academic research, but these findings are valuable for cryptocurrency investors.

Let's get started!

I used the public data from DefiLlama for analysis. In my analysis, I included the top 200 DeFi projects ranked by Total Value Locked (TVL) as of the end of October 2022.

Locked Total Value

The following image shows the distribution of total locked value across different platforms.

TVL of 14 platforms exceeds 1 billion US dollars. TVL of 65 platforms ranges from 100 million to 1 billion US dollars. The TVL of the remaining 121 platforms is less than 100 million US dollars, with the minimum being 23 million US dollars.

The distribution of TVL follows the Pareto distribution. The top 40 (20%) DeFi on the list account for 80% of all TVL.

Supported Blockchains

When it comes to DeFi, Ethereum is undoubtedly the leader. Of the projects examined, 96 of them only provide services on or also on Ethereum.

BSC, Polygon, and Avalanche follow closely behind with a certain distance.

There are 5 platforms that use more than 10 different blockchains. 36 use between 2 and 10. The remaining 159 only use 1 blockchain.

DeFi Use Cases

The following diagram illustrates the most common use cases for the platform under consideration. DEX, liquidity mining, yield farming, and lending are the most common features of every DeFi platform.

Which use case involves the most funds? The following chart explains this in relation to "Mortgage Debt Position, Liquidity Collateral, Index, and Borrowing".

DeFi Market

I compared three platforms with high TVL (Maker DAO, Balancer, AAVE). These illustrate the monthly percentage changes in TVL and platform token prices. The line represents the monthly percentage changes in Bitcoin prices.

Remarkably, each platform has similar market trends.

This may be because most of the funds invested in various DeFi products are cryptocurrencies. As individual currencies are highly correlated with the trend of Bitcoin, it is not surprising that the trends of various platforms seem to be consistent.

Summary

This analysis shows that the services most frequently offered by DeFi platforms (decentralized trading platforms, liquidity staking, yield farming, and lending) are also related to the highest total value locked on average.

Although some projects only run on one or two public blockchains, there are projects that exist on 15 or 20 chains.

However, analysis shows that the number of blockchains running a project is not related to the success of the project. It is difficult to draw conclusions about whether certain use cases are in an upward trend.

Generally speaking, the performance of the entire DeFi market is heavily influenced by the price of Bitcoin.

In addition, there are indications that TVL seems to be a good indicator of success and quality for DeFi platforms. Platforms with higher TVL seem to perform better in terms of their price performance. This means that, on average, they are better investments over a longer period of time because they have experienced more price increases or less loss of value compared to DeFi projects with lower TVL.

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