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Ethereum Liquid Restaking Drives DeFi TVL to $100B in Q1 2024

When compared to the previous quarter, the total value locked (TVL) in decentralised finance (DeFi) approximately doubled during the first quarter of 2024, indicating that DeFi has witnessed tremendous growth from the previous quarter. It is possible to ascribe, at least in part, this spike to Ethereum’s liquid restaking activities, which have been the driving force behind the expansion of DeFi TVL prices. Protocols such as Lido and EigenLayer have been essential in this growth, since they have contributed to the widespread adoption of liquid staking and restaking.

Recent study indicates that DeFi TVL experienced a significant increase from a low of $36 billion in the fourth quarter of 2023 to a high of approximately $97 billion in the first quarter of 2024. This is an increase of 81% and marks a high point for DeFi TVL that has been reached in the last two years. There was a modest rise in the TVL data that Messari gave, and he said that the amount of DeFi collateral climbed by 65.6% from the previous quarter to reach $101 billion. A number of factors, including the rise in the values of underlying assets and the implementation of liquid restaking, have contributed to the expansion of TVL.

Both asset price appreciation and liquid restaking were the primary factors that contributed to the increase of Ethereum’s total value of assets (TVL), which was roughly 71% higher than before. Lido and EigenLayer are two examples of protocols that have played a significant role in the revival of DeFi TVL since its inception. On March 13, liquid staking TVL achieved an all-time high of $63 billion. This result was mostly driven by the Ethereum liquid staking protocol Lido, which now controls a market share of 62% of the liquid staking ecosystem. In addition, during the first three months of 2024, the liquidity restaking protocol known as EigenLayer seen a significant increase in both its popularity and its utilisation. The total value of EigenLayer’s TVL reached $12 billion at the conclusion of the quarter, representing a stunning 990% rise. EigenLayer makes it possible to stake Ethereum several times, which results in increased returns.

In addition to liquid restaking activities, user activity also played a big influence in the expansion of DeFi TVL. This growth was not just contributed by liquid restaking initiatives. In the most recent quarter, QuickNode recorded a significant increase in user activity of 29.1% compared to the previous quarter, which has spurred expectations of a second “DeFi Summer”. Despite the attempts of the SEC to regulate the decentralised finance area, there are indications that expansion and a paradigm change are on the horizon.

However, the current retreat in the cryptocurrency market has resulted in a decrease in the value of DeFi TVL that has been seen. As this article is being written, the value of DeFi TVL has dropped by 11%, reaching $86.6 billion. The entire value of assets that are locked in DeFi protocols has been negatively impacted as a consequence of the larger market slump, which has cause this reduction.

Image source: Shutterstock

DeFi – Find Out What's Happening in Macau on This Exciting Topic

Macau is an awesome place to host a conference. Often dubbed the Las Vegas of China, this tiny strip of land is a buzzing ecosystem resplendent with golden hotels, temples, and resorts. Returned to China since 1999, its Portuguese inheritance is very strong with Portuguese blue-framed houses sitting cheek and jowl beside Chinese temples. The people are friendly and the temperatures warm when we arrive for the 6^{th Finwise conference in the region – this time theme is DeFi or decentralized finance.}

The summit was co-hosted by Mike Costache (Co-Chairman & CEO of FinWise Global and Managing Partner of TaaS Capital), Eric Gu (Co-founder & CEO of DualChain Network Architecture and founder & CEO of Metaverse Foundation, the first Chinese ICO back in Aug 2016) and Hao Zeng, Co-founder & CEO of Ant Node Alliance, a leading blockchain marketing company in China.

Flying into Hong Kong is also without trouble – no protestors airside. Returning home is the same as the ferry between Hong Kong and Macau is all airside: handy to know in these interesting times.

DeFi is a growing meme in the blockchain world. The term emerged some eight months ago but it is still very nascent in this industry. A nascent meme in a nascent industry.

DeFi has a number of primary features. It is permissionless and anyone can access it with a smartphone and an internet connection, thereby removing traditional barriers to finance: notably wealth, geography and location inhibitors. It is decentralized and less prone to hacking. It is censor resistant: transactions in a Defi world cannot be changed, reversed or stopped. This is crucial when living in countries where either inflation has gone through the roof or government governance is compromised.

It is transparent and private allowing users to fully control their own money and transact freely. It is also programmable resulting in low-cost financial services.

The conference was hosted by Brad Pitt film Double, the charming Rob O’Malley along with his Chinese colleague Emma Lee. The conference was also bilingual with simultaneous AI translations of the presenters into both languages; sometimes with unintended comic results.

Hosted by Mike Costache, the DeFi conference was certainly ahead of its time. Notable speakers included local hero Eric Gu, Alex Lightman, Eddy Travia, Franklin Urteaga, Rossco Paddison, Oliver Yates, Paul Murphy, Hans Lombardo, Dan Schatt, Ruslan Gavilyuk, Alexi Lane and Alexander Alexandrov.

There were live video link-ups with Brock Pierce and Tone Vays. Technology being technology these were glitchy. Perhaps the next time it might be better to pre-record a short video and have a live Q&A afterward.

There were plenty of selfie opportunities as the largely Chinese audience were keen to be snapped with any caucasian subject. As events go, I did feel pretty important by the end as queues of people waited patiently to have their picture taken with me.

The venue was the JW Marriot in the Galaxy Mall. Think end to end designer shops wrapped around a casino. The auditorium was laid out in classroom seating and held upwards of 1000 people. The audience was very vocal during talks, often prompting loud grunts of positive assertions.

I moderated one panel with the interesting topic of Crypto Banking as a service – Will DeFi prevent the next financial crisis? I was joined by a lively bunch of debaters – and got off to a heated start with Alexi Lane declaring he would not put his money in a bank at all. Dan Schatt went on the offensive to say that we were on a continuum and that traditional finance would merge into DeFi over time. Vadim Pushkarev, as befits the token Russian on the panel, spoke up of revolution and said that we were in the middle of one. Ruslan Gavrilyuk spoke of institutional investors driving the services forward – or sideways depending on your viewpoint, while David Wang opted for regulation in line with current best practices.

The 30 minutes were over in a flash but we all reckoned there was still a new financial crash happening despite the best efforts of DeFi.

However, the best takeaway comment of the conference has to be from Rossco’s panel when he compared the current market as akin to the period after the dot com crash. He pointed out that there is an inflection point that happens – which we forget time and again – where we hit a topping point and what is only imaged now becomes reality.

Welcome to the world of Defi.

Image via Shutterstock

Blockchain.News Presents: State of DeFi Survey

“Decentralized finance (DeFi) essentially involves a brand-new monetary system being built on public blockchains.” With the advent of blockchain, the concept of DeFi arises from the fact that there are 1.7 billion people do not have the right material or access to financial services. As a result, the wealth generated is not efficiently transferred to the unbanked population. Decentralization, as a concept allows for identical records to be kept in thousands of computers through peer to peer networks, adding to the fact that access can be granted to everyone!

DeFi is one of the hottest topics in the crypto world in 2019. According to the recent findings by dapp.com, DeFi gained tremendous growth in Q3 2019 with a market value of over USD 525 million. 88% of DeFi dApps are built on Ethereum, and MakerDAO and Nest are the two leading DeFi dApps. Finance dApps ranks 2nd in terms of trading volume, and gambling dApps remains its dominance.

Blockchain.News is proud to present the “State of DeFi Survey”! We would love to hear your thoughts on DeFi, as well as its challenges and future prediction by 25 Oct.

Take part in our survey now!

https://forms.gle/f9oDeG4djJGMrpiy6

Peertec Joins Hands with Penta Security for Blockchain-Enabled Infrastructural Security

Peertec, a leading blockchain-focused fintech firm, has revealed its strategic collaboration with Penta Security, a highly valued web and data security company.

According to the announcement on October 15, 2019, the two South Korean firms have partnered to boost Peertec’s infrastructure security using blockchain technology. The security of its GDAC cryptocurrency exchange and services is also expected to be strengthened.

Peertec’s GROW service

The partnership is scheduled to propel the security of the node found on Peertec’s GROW service. GROW is a blockchain-powered derivate product that was availed on July 30.

Precisely, it is the globe’s first-ever blockchain-enabled derivate product meant for tokenized asset management.

Ash Han, Peertec’s CEO, illustrated his delight about the crucial partnership.

Han noted:

“We are excited to cooperate with Penta Security, which is a well-known professional security services company that has 21 years of experience in the industry.”

He also added:

“The security on the products and services that GDAC exchange and Peertec offer will be strengthened, building the level of trust in the cryptocurrency market, and keep users’ assets more safe and secure.”

On the other hand, Seokwoo Lee, Penta Security’s CEO, acknowledged that the company intends to create a sustainable and safe Decentralized Finance (DeFi) ecosystem.

Lee asserted:

“Through the partnership with Peertec, which is a company that is rapidly expanding and growing in the blockchain fintech industry, we will expand the scope of our security technologies to the blockchain industry.”

Penta Security has made a reputable mark as a professional security services company that avails services, solutions, and products for blockchain, Internet of Things (IoT), and enterprises.

Image via Shutterstock

Understanding Digital Asset-Backed Securities: Why is Blockchain Important?

In the second part of our interview with Florian Matthaeus Spiegl of FinFabrik, he explained how FinFabrik helps tackle challenges for many traditional financial services companies, and how the industry can work together to build more inclusive, accessible and efficient systems.

Part 1: Meet the FinTech Entrepreneur: Co-Founder of FinFabrik, Florian Matthaeus Spiegl

The digitization drive 

Spiegl believes that Bitcoin and other cryptocurrencies are examples of a successful “Proof of Concept” for digital assets. FinFabrik looked at cryptocurrencies and said, “This is probably not the end of it. We will see assets that already exist in the traditional markets being digitized using the same principles and technologies.”  

FinFabrik is focused on asset management, as innovation in capital markets systems has not been very strong. FinFabrik followed its market hypotheses and decided to go “all in” on digital assets.     

“Blockchain is not the right technology to solve every problem out there, but for some things, it certainly is. In the private market asset management space, blockchain is a great solution helping to make processes more efficient and to improve access and liquidity while maintaining legal enforceability; for that, it is the right technology,” explained Spiegl. 

FinFabrik chooses permissioned blockchains 

To understand business enterprise blockchain adoption, we first need to differentiate between public blockchain (permissionless) and private (permissioned) blockchain. With FinFabrik’s target group set on institutions in the capital markets, Spiegl explained that many institutions want to be in control and deal with known and trusted counterparties while still achieving a reduction in middlemen and process complexity. At the moment, permissioned setups best fulfill these requirements. In the longer run, permissioned and permissionless setups will co-exist and interact with each other, depending on the specific use case.  While looking at both approaches, FinFabrik eventually decided on permissioned protocol types, and they explained to Blockchain.News that their infrastructure integrates R3 Corda and Hyperledger Indy. 

Understanding digital asset-backed securities: Nothing but a bundle of rights  

Blockchain is used to dematerialize and digitize processes and workflows, starting with digitizing the asset. “Why is blockchain important? If you look at an asset, it’s nothing but a bundle of rights that counterparties agree to. The way we communicate and record these rights today is in a material way, typically on paper,” explained Spiegl.  

“Token” is used as a technical term as the main process is digitization, and tokenization is a technical way of doing it. “A significant and important step is still to structure the instrument correctly, to make it hold up in a court of law so that the digital way of representing it is just as enforceable as the material way,” said Spiegl.  

Spiegl further explains the importance of blockchain, “we believe it is best suited to keep a time-stamped series of immutable records, an efficient way to normalize and share information and creating an audit trail of the truth of historical events.”  

By digitizing an asset and the respective workflows of managing it, overall costs are lowered, and the ownership of the asset could be broken down into smaller fractional parts. 

Centralized vs. decentralized: The power is in collaboration 

The decentralized finance (DeFi) approach aims to create a permissionless, public, and transparent infrastructure and to cut out the middlemen. For example, remittance costs are high for consumers because of the involvement of many middlemen who provide services along the value chain. Reducing these costs by connecting users more directly is one goal.   

Spiegl believes that powerful change could be the outcome of DeFi but does not see value in putting centralized against decentralized infrastructure approaches, as he believes that they can coexist and “reinforce each other.” He added, “for institutions, this is an interesting development to pay attention to, although it will not solve everything or replace everything we have. There are complementary elements between the approaches.”  

“We can work together to make financial markets better, to make them more inclusive, bring down costs, and allow much broader access. It really starts with the centralized and big institutions collaborating with players who have a more decentralized perspective. The power is in collaboration, I don’t think it’s trying to replace all of the status quo,” stated Spiegl. 

The real challenge for institutions in digitization  

Spiegl emphasized getting the foundation right, making sure digitization of assets and processes are adequately done; development and delivery of technology are then more effective.   

“We are focused on enabling institutions and the more traditional types of assets on digitizing asset classes that are significant enough to have a positive impact on the industry and on our business model. For example, the private credit space, direct lending between institutions – there is a lot to gain by digitization using blockchain. First, the efficiency of digital workflows but also broader deal discovery and access and finally increased liquidity in secondary markets. Institutions in private markets will be able to lower complexity, develop new revenue sources, reach more clients directly, and manage their risk exposure more actively.”  

Spiegl concluded, “We are well aware that, while everyone sees that digitization in private markets is inevitable, these are still early days and adoption will take time. I don’t think regulation is a significant hurdle. The real challenge for institutions is the need for cultural change, to take more risks and small steps of innovation, do pilots with companies like us to learn in this new field. The power is in collaboration.” 

Central Bank Official: Blockchain Application Ideal for Chinese Commercial Banks

Li Wei, the Technology Departmental Head of the People’s Bank of China, has urged Chinese commercial banks to embrace blockchain and digital finance. His sentiments come at a time when decentralized finance (DeFi) has become an emerging trend, whereby decentralized networks are set to transform traditional financial approaches into transparent and trustless protocols.

According to Reuters, Wei shared these sentiments at a Shanghai forum, and he challenged commercial banks to step up their game when it comes to blockchain application. His viewpoint comes at a time when China’s President Xi Jinping has noted that the nation ought to accelerate the development of blockchain technology.

Xi stipulated that the application of blockchain technology has extended to digital finance, internet of things, intelligent manufacturing, supply chain management, digital asset trading, and other fields.

Presently, the establishment of blockchain technology is being accelerated in major nations across the world. China has not been an exemption as it has developed a solid foundation in this technological innovation. Nevertheless, collaborative research is necessitated for blockchain to thrive.

On the other hand, Sun Tianqi, the chief accountant for China’s foreign exchange regulator, has stated that emerging markets ought to take prudent actions against illegitimate cross-border capital flows involving digital currencies. This trend has been instigated by FinTech because of cross-border transactions.

Image via Shutterstock

Binance CEO Boosting the Super Exchange Ecosystem, With the Possibility of Adding Options

Changpeng Zhao (CZ), CEO of Binance, the world’s largest crypto exchange, was a keynote speaker at multiple blockchain-themed events in Singapore in mid-November. During these events, CZ made new announcements regarding the company’s new partnerships and new products that will be rolling out.

Blockchain.News took this opportunity to speak with CZ, one of the most successful entrepreneurs in the crypto industry at Blockshow Asia 2019, held in Singapore to gain a more in-depth understanding of the new partnerships and products that Binance has to offer.

What has Binance been up to lately?

Binance has been adding a lot of new functions such as staking and airdrops and the support for forks. CZ mentioned that later on, there may be plans to support payments and other features. The concept of a super exchange was aimed to allow users to have access to various value-added services on the app. He mentioned: “We are in the mobile internet stage area now, so we got a lot more features on the app. We do see a majority of people using exchanges for crypto, on the go. We’ve got to make our app a lot better.”

DeFi vs. CeFi: What does Binance have in store?

Legacy banking services have very high demand, according to CZ. “We pushed out fixed-term lending and also released variable term lending, which means you can lend and redeem at the same time. The interest rates are much better compared to traditional financial banks or financial markets,” explained CZ. The focus of the release of the lending platform was to benefit users as they would be able to earn up to 15% interest on their BNB, ETC, and USDT.

“DeFi is a very hot topic in our industry, right now, we want to do that as well, but before that, with CeFi [centralized finance] we also want to provide whatever our users demand first,” said CZ.

Binance Futures requested by active traders

Binance Futures launched in September, shortly after its launch, an all-time high record was recorded at 315,000 BTC being traded in 24-hour volume, which was around 2.9 billion USD. Binance Futures allows for highly leveraged trading using a sophisticated risk engine and liquidation model, as well as a built-in hedging tool to enable traders to manage risks.

When Binance first launched, only 20X leverage was available when it came to trading futures. It was a new product at the time, and CZ explained that the company did not know how deep the liquidity would be and whether the company could manage leverage and liquidations properly.

“Binance futures has grown tremendously, and right now the single contracts in BTC futures has surpassed Binance.com spot, in terms of daily volume, with about 170 different coins. We feel that the liquidity is there, and the volume is there, so we decided on the higher leverage of 125x,” explained CZ. He explained that the higher leverage was frequently requested by the active traders on the platform, resulting in the decision to provide the service. CZ encouraged experienced traders to take higher leverage for lower trading costs, as less capital will be tied to trading.

Binance DEX and its ecosystem

Binance DEX is the decentralized exchange running on Binance’s native chain, Binance Chain. The Binance DEX development team has encouraged projects to participate in issuing new tokens on Binance’s native blockchain. CZ believes that decentralized exchanges bring hope and new possibilities as it offers a trustless and transparent financial system while providing more control over the users’ own assets. According to CZ, Binance DEX is actively being worked on by a team of 50 to 70 developers. There is a hard upgrade every month, and a few new features will be announced soon by CZ.

Options in the future?

Binance acquired JEX, an options and futures platform that works differently compared to the traditional financing options. The acquisition of JEX was to boost Binance’s crypto derivatives offerings for pro traders. Binance JEX has “pseudo options,” which CZ refers to, for insurance types of options as well as hedging. CZ announced that in the next three to nine months, Binance is looking to offer options. CZ also mentioned that Binance has been working with several partners to launch social trading in the future.

Integration of fiat gateway with Paxos

Paxos, the regulated, New York-based exchange and stablecoin issuer has launched a new fiat gateway service, making swaps between US Dollars and stablecoins available to users. Binance became the first cryptocurrency exchange to integrate the new product, with Binance USD (BUSD). CZ elaborated: “That’s a very easy on and off-ramp from BUSD, or PAX into US dollars into bank accounts.” He also mentioned that the two companies would be working more closely to integrate new solutions.

‘Every exchange should provide staking rewards’

The Binance CEO believes that every exchange should provide staking rewards. “I think this is a fundamental thing that we need to provide. Every exchange should provide that. We try to provide our users with all the benefits that cryptocurrency offers them, including staking rewards, with any coins that have staking mechanisms,” he explained. “We don’t make any money out of it, and we don’t charge any fees, it’s just a value-added service we provide, we believe that is a fundamental right for the users who hold cryptocurrency with us to enjoy those benefits.”

He firmly believes that this will encourage more users to hold cryptocurrencies with the company, and does not give anyone an excuse not to, which helps the company’s trading business. “We are in a very strong position where we do have a strong revenue source from trading fees, and we can subsidize all these businesses, and we can support additional businesses this way.”

Binance’s native phone on its native blockchain

Another recent announcement that was made was regarding Binance’s partnership with the Taiwanese mobile phone company HTC. The new Binance Exodus phone made in collaboration with HTC, with an embedded hardware secure wallet, the HTC phone also supports Bitcoin nodes, where 250 gigabytes of Bitcoin data will be available on the phone. “It’s a native phone that is supported by the Binance Chain. It also supports BTC, BTC tokens, and Binance DEX,” said CZ. “I do believe that the mobile phone is a very key device acting as a wallet, and it is a master device we carry around with us every day. I think this is very good progress for us and HTC.”

DappRadar—Redefining Accuracy and Transparency in the State of Dapps

Skirmantas Januskas is the CEO and founder of DappRadar.He joined the crypto and decentralized applications (Dapps) space in late 2017 and found his interest peaked by the enthusiasm and kindness of those he interacted with in the community. He founded DappRadar in February 2018, a website that lists the best Ethereum Dapps and ranks them by DAU (Daily Active Users) showing the authentic acceptance and usability of Dapps.

Although Bitcoin kicked off the entire ecosystem of blockchain, it was Ethereum that first unlocked aspects of its true potential by allowing developers all over the world to create decentralized applications (Dapps) on their blockchain platform. Through Ethereum, developers could code smart contracts that serve as the blueprint for Dapps. Other blockchain protocols joined in, the two most major Dapp enabler alternatives to Ethereum are TRON and EOS and there are currently over 3000 Dapps running on blockchain protocols.

So which Dapps are the most used, which protocols work best? Which networks are able to scale and support your business’ decentralized application? To answer these questions is a slew of Dapp Data sites, but one site seems to rise above the others and is indeed redefining the metrics for the space—DappRadar.

Redefining the Metrics

According to Januskas, the vision for DappRadar is to be a trusted starting point for Dapp discovery and act as a distribution channel for Dapp developers that are looking to reach new consumers. DappRadar has already built a leadership position as the most trusted Dapp platform. He said, “Recent product upgrades have seen us present the most accurate data on EOS with our unique token tracking, this will be rolled out to Ethereum in November and will potentially reveal billions of dollars of undiscovered volume and completely change the way Dapp industry data is evaluated and reported. We will play a leading role in growing the market for Dapps through our commitment to working closely with Dapp developers and providing reliable data.”

DappRadar has tracked the daily metrics of over 2,700 Dapps and 12,000 smart contracts across the Ethereum, EOS and TRON blockchains since February 2018. Januskas added, “Unlike our competitors, we have a public, robust attitude in terms of filtering out what we consider ‘fake’ or ‘manipulated’ traffic, notably traffic generated by bots and we are working hard this year to provide even more product features to allow us to present the most accurate data. So how do we set ourselves apart – We focus on our product and delivering the most accurate data.”

Identifying and Combating Manipulated Data

As in any traditional industry, there will always be incentives for companies to inflate their Dapps’ performance. Trying to game the system is inherent in all sectors, and despite the relative openness of blockchain data, it continues to happen in the decentralized space.

Currently, Januskas and his team see Dapp data being actively and passively manipulated in three main ways:

Activity is actively manipulated by a Dapp boosting service to ensure Dapps remain high in rankings. This is typically driven by the developer themselves.
Dapps contain incentives that encourage players to create multiple wallets and accumulate rewards and tokens. This may be active manipulation by the developer or a byproduct of design.
The trading of Dapp tokens on exchanges is included in overall traffic data.

He said, “DappRadar has started filtering its results to remove such activity and will continue to monitor future developments, and take swift action when required to ensure our data is as accurate as possible. This may include marking Dapps we believe are engaging in manipulative and deceptive activities, potentially even blocking or delisting Dapps from our site that continue to do so.”

On spotting fake volume in Dapps, Januskas said, “We look at the anti-money laundering regulators and take note of what CoinMarketCap is doing—we are all detecting these patterns but unfortunately I cannot disclose the actual fake cases and the algorithm pattern that we have identified. We do analyze each account and each wallet to monitor the flow of money.” He reiterated, “We want our industry to be as transparent and truthful as possible so the rewards of what we are sure will be a vibrant and profitable ecosystem go to the best products, not those that are best at gaming the system.”

Ethereum vs EOS vs Tron

DappRadar recently added full token tracking for EOS Dapps which has reportedly uncovered that the EOS Dapp ecosystem may be undervalued by 1 billion dollars—as other sites typically do not track the full token.

When asked how important this new tracking revelation was for the Dapp market, Januskas said, “It’s not only important, it’s completely necessary if you want to claim to be providing the most reliable and accurate data. Our competitors do not track this way simply because they cannot until they do the background work to make it possible. More comprehensive token tracking is key to increasing the transparency of value creation in the Dapp ecosystem, especially for decentralized exchanges. For instance, Newdex (DEX) based on the EOS blockchain has seen the addition of around $5 million value in non-native tokens within the first 7 days of launch on top of their $21 million value in native EOS tokens.”

Source: DappRadar – Full Token Tracking

Specifically, with Ethereum token tracking, Januskas said, “The most challenging aspect is getting the pricing right. If you visited a number of exchanges you see ERC-20 tokens being priced differently, so this is problematic and also presents kind of an ideological challenge—which exchanges can be trusted and where can users get the price?”

The Dapp of 2019? How MakerDAO Took Charge of the DeFi Field

The MakerDao project is the contemporary success story for decentralized finance (DeFi). The project went live in December 2017, with DAI as the USD stablecoin and MKR functioning as the governance token. In the world of decentralized finance, MakerDAO is by far the most popular application running on Ethereum and has been steadily increasing traction since its launch. After only a year and a half into production, MakerDao reached its all-time high market cap of $97M on July 9, 2019.

In part one of our interview with Gustav Arentoft, Business Development, Dai Speaker, MakerDAO, he offers Blockchain.News insight into the home-grown success of his organizations in terms of transparency, governance and the interesting use case of Maker in Spotify.

Steady growth of DAI despite dropping market dominance

According to DeFi Pulse, the total ether deposited in MakerDao represents just above 50 percent of the total value locked into DeFi protocols. While still dominant it marks a significant decrease from the 90 percent recorded at the start of the year. While the percentage has fallen, Arentoft believes, “It really depends on what you look at as dominating factors. Currently, the rankings are defined by the number of crypto assets locked into a DeFi protocol. We were one of the first projects that you could actually lock up Ethereum to print DAI against so of course, our market dominance was much higher previously.” Commenting on the increased competition Arentoft said, “Fortunately some of these new players have come along, like Compound which has had a very strong performance over the last 12 months. There are also different protocols like Uniswap, but the incredible thing is these new protocols—they take DAI and actually one of their primary use cases in their system and protocols is using Dai. For example, Compound dominates the holding of DAI with 12.6M. So we may have lost market cap but that market cap went into other protocols that utilize Dai in efficient ways and even open up some very strong arbitrage opportunities.”

Exhibit 1: DAI Locked in DeFi 2019

Source: DeFi Pulse

Due to the nature of the DeFi ecosystem, ultimately Maker’s lost market cap is benefiting the end consumers as the various protocols are interoperable (see Exhibit 1). Arentoft said, “The protocols continue to leverage each other’s technology and awesome products and services are being created for end-users, so we are not overly concerned about the perceived loss in dominance because Dai will still be the stable value in these systems.” He concluded, “If you look at us from just a crypto perspective, we might continue to appear shoulder to shoulder against these very competitive and good products but if you look from the outside, I believe we will be one of the first projects to bring legacy world collateral into the smart contract-based systems.”

Bringing liquidity to Spotify’s artists

Turning to use cases and partnerships, Arentoft discussed a Maker’s collaboration with Paperchain—an extremely efficient data analytics provider which leverages data which can be publicly viewed on platforms such as Spotify.

Arentoft said, “The problem that we’re solving is that currently the artists streamed on Spotify have to wait a long time before they actually receive their royalties and payments, so we’ve created an extremely efficient and accurate data analytics tool to basically predict the amount owed down to a 1% difference. This creates an alternative asset that traditional institutions are not used to serving, however, it is an asset that’s actually relatively easy to price.”

On the Spotify project, Maker has been working with an open-source framework from Centrifuge, Arentoft said, ‘’We basically can take these individual royalties which are converted into NFTs and then you can actually create a standardized version of the collateral, which we didn’t aim to use in multi-collateral Dai.” He explained, “That basically means that U.S. and Spotify artists can predict their future income. They can leverage the blockchain and the MakerDao protocol to actually gain an advance payment on the royalties that the artist will be getting. It is a new way of bringing liquidity to artists basically.”

Maker’s Transparency and Decentralized Governance

Maker’s enjoys an unmatched degree of popularity among the DeFi community. Arentoft believes that this can be attributed to the very high degree of transparency within the organization. He said, “I think we have one of the only projects that has verifiable revenue directly on the blockchain, enhancing the transparency of fees coming to us and the overall movement of capital in the blockchain. If you want to check it out, you can go to the website called Makerburn.com which in real-time and shows everything going through the system.”

On Maker’s governance as a decentralized autonomous organization, Arentoft commented, “We have been live with the ability to execute on-chain governance since 2017. In the future, governance is going to be a little bit more tricky because there’ll be a lot more different kinds of decisions to make regarding the structure.” He continued, “But the governance of Maker was something which started out in many ways as an experiment and now with a proven track record, we have shown that this is something that actually works.”

MakerDAO’s Popularity: Behind the scenes

Arentoft believes that there are many different factors that have contributed to the success of Maker’s decentralized autonomous governance. He elaborated, “We have had very strong support within the Ethereum community and I think we have one of the first strong use cases has managed to manifest itself, which in turn has created a sphere of people who wants to participate.”

Maker has also been very open and transparent about issues within their protocol such as the common pain point of scalability but has continued to engage their community throughout the process of addressing these issues. Arentoft couples this enhanced transparency with Maker’s strategy to attach themselves to projects that have the greatest growth potential as further indications of the economic communities’ interest and patronage. Arentoft divulged, “We truly project that we can go out and change the lives of everyday people right, at tremendous scale. I think people want to join that movement and the future prospect and at the same time, the Maker project has drawn the attention of the people who tend to hang around in macroeconomics circles. We have some strong followers, both from central banks and prestigious academic communities so I think there’s a lot of different elements that when combined make Maker a pretty interesting and quite outstanding project.”

Stay tuned for Part 2 and 3 of MakerDAO’s interview.

DappRadar—What is the Dapp of 2019?

Skirmantas Januskas is the CEO and founder of DappRadar. He joined the crypto and decentralized applications (Dapps) space in late 2017 and found his interest peaked by the enthusiasm and kindness of those he interacted with in the community. He founded DappRadar in February 2018, a website that lists the most popular and utilized Dapps and ranks them by DAU (Daily Active Users) showing the authentic acceptance and usability of Dapps.

In the second part of our exclusive interview with Januskas, we discuss Ethereum’s transition to proof-of-stake, the growing Dapp ecosystem and the DeFi revolution instigated by MakerDao.

Staking and Scaling in the Dapp ecosystem

Ethereum has served as the main network for Dapps to be built upon, but since its creation, it has run on a proof-of-work consensus algorithm. With Ethereum announcing Eth2.0 with the transition to Proof-of-Stake (PoS), we asked Januskas what impact staking would have on transforming the current Dapp ecosystem. He said, “Many of the blockchains we already track such as EOS, TRON and Loom Network’s Basechain, use a Proof-of-Stake consensus so that part won’t be anything new. What may be more interesting with staking on Ethereum is how this could be integrated as a new feature into existing Dapps, or indeed create opportunities for new Dapps, especially in the DeFi category.”

Scalability of Dapps has been a well-recorded pain-point of blockchain adoption. Januskas acknowledged this point and commented, “Compared to centralized architectures, blockchains will always struggle in a relative sense with scalability. We’ve seen that regularly on Ethereum since CryptoKitties launched in late 2017 and EOS is currently struggling with similar issues because of the popularity of a single new Dapp which is incentivizing people to use their tokens in a new way. If you wanted to be philosophical about it, you could argue issues with scalability actually demonstrate the popularity of a particular blockchain. Or another analogy: building more roads encourages more people to buy cars and drive!”

State of DeFi

Decentralized finance (DeFi) has been making waves over the last several months following the surge in platforms and products offering DeFi services and applications. Januskas is particularly pleased with this development, he said, “Yes, the explosion in DeFi Dapps on Ethereum is proof Dapps can offer great utility and do so in a manner that is very hard to copy in the centralized software space. The major driver of this is MakerDAO’s DAI stablecoin, which enables developers to build increasingly complex products on top of a trusted layer. This level of composability is at the heart of DeFi and allows developers to come up with ever more sophisticated solutions to niche problems.”

Despite his positivity, Januskas offered a few words of caution for the DeFi space, he said, “Although a lot of value is being put into these new financial instruments, these products are no way near accessible to the mass market. And as all the developers point out, everything is in beta. It will be interesting to see the market reaction should any serious bugs or exploits emerge.”

Dapp Growth and Dapp of 2019

While DeFi has emerged as the most significant vector for Dapp growth in 2019, the game sector hasn’t been slacking. 2019 has seen the launch of new titles, some of which have quickly grown to become the most popular Dapps in terms of active wallets. In addition, some older games remain in contention for the top spot. Januskas said, “The result is that as we enter Q4, at least four titles are sustaining more than 2,000 daily active wallets. The blockchain game sector remains incredibly buoyant. The current games are a small subset of the total projects in various stages of development, with 2020 shaping up to be a very important period for this nascent industry.”

If forced to choose a “Dapp of the year” in 2019, Januskas was quick to comment, “There’s no question that MakerDAO has been the most impactful Dapp in 2019 in terms of number of users and token volumes, plus the opportunities it’s created for the entire DeFi ecosystem.” He added, “I also have a soft spot for Uniswap, which makes a complex thing – creating a crypto trading platform – very simple, also enabling users to provide its underlying liquidity.”

Dapps Should Focus on Users

As one of the main people aiming to grow the Dapp ecosystem, Januskas advised, “Dapp developers need to keep the user at the heart of everything they do. In its infancy the internet was similar. Programmers only cared about getting a site live and having it provide valuable info. The aesthetic and user experience were not even on their radar and as such it took quite a long time for the internet to become truly appealing to the masses, a transition that really happened once user experience and aesthetic became paramount.”

According to Januskas, Dapp developers have to make their products as accessible as possible and user-friendly to stand the best chance of discovery and retention. He said, “Providing users with understandable instructions and not assuming they are as knowledgeable as the developers is a good start, gameplay walkthroughs and advice for newbies on how to actually enter a Dapp is paramount to the long term success of Dapps in our opinion.”

DappRadar in 2020?

Januskas ended our interview by sharing DappRadar’s plans for 2020. He said, “We are using the $2.3M investment led by Naspers Ventures and Blockchain Ventures secured in September 2019 primarily for R&D, developing new functionality to help the business expand its services and reach the next stage in its growth. By the end of 2019, we aim to be the most accurate and reliable Dapp data source on earth.” He added, “This process is already well underway, alongside a host of UX updates. Moving into Q1 2020 we have some very exciting developer and user product updates and further token tracking across TRON and Ethereum, integration of additional protocols and the release of a proprietary, robust artificial traffic filter as part of our ‘Clean Data Mission’ for 2020. We see lots of evidence that demonstrates the long-term potential of the Dapp industry and are building a business that maximizes that into the future.”