By Cointelegraph.com News
The total value locked (TVL) in decentralized finance (DeFi) applications reached $192 billion in May, the largest amount since February 2022, according to a report from blockchain analytics platform DappRadar. Despite the rise in TVL, the number of unique active wallets (UAW) using DeFi declined by 21%.
The U.S. dollar value of cryptocurrencies locked within DeFi applications grew by 17% in May, fueled by increasing Ether (ETH) and token prices. Out of all networks, Ethereum dominated the DeFi market’s TVL, making up $130 billion, or 68% of the total. Solana came in second with $10.9 billion, or 5.7% of the total. Solana’s DeFi TVL increased by 14% over the previous month.
Despite the strong TVL growth, the DeFi sector saw a decrease in the number of daily UAW, indicating that the user base is shrinking at the same time that remaining users are depositing more or seeing their portfolios increase in value. UAW declined by 21% to 1.75 million for the month, which is 17% of the UAW for all Web3 apps combined.
DappRadar attributed the TVL increase to short-term speculation around the possibility of an Ethereum exchange-traded fund. It stated, “The DeFi UAW was down, meaning that most trading was speculative based on ETH ETF.”
According to DefiLlama, the 24-hour trade volumes of decentralized exchanges increased from $1.7 billion to $5.1 billion between Oct. 1, 2023 and June 7, 2024. This may have resulted in higher yields for liquidity providers and lenders, leading them to deposit more crypto into DeFi apps. This was also a period when Bitcoin (BTC) and Ether exchange-trade funds were widely discussed.
Related: Ethereum ETF launch date depends on issuers, not SEC — Gensler
Despite the DeFi sector seeing a drop in UAW, other sectors of the Web3 market gained users, the report claimed. The gaming sector had over 3 million active users, an increase of 7.5% over the previous month. The number of nonfungible token (NFT) marketplace users increased by 11%, reaching 1.52 million UAW, and Web3 social media apps reached 1.92 million UAW, increasing by 29%.
The total number of Web3 UAW has now reached 10.4 million, according to the June 6 report. An earlier report in April stated that UAW had hit 7 million in Q1 2024, having risen from 4.3 million users in 2023. Together, this data shows a trend of steadily increasing users for Web3 applications. However, some experts have argued that onboarding is still too difficult and that this will limit the industry’s future growth if it is not corrected.
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Source: Cointelegraph.com News
