DeFi is quickly becoming one of the fastest growing areas in the crypto space. New DeFi tokens are sky rocketing in market cap and the protocols are steadily growing into important blocks in the crypto market infrastructure. As a result, DeFi is also capturing the attention of investors and traders who are regularly looking for new insights in the space. This session provides a deep dive into analytics about DeFi protocols. In 30 mins, we will take a data-centric view of the DeFi space and highlight some fascinating trends and metrics investors should pay attention to. More importantly, we will showcase some indicators and signals that regularly offer fascinating insights about this new area of the crypto space..

1. 30 Minutes of DeFi
Analytics

2. Agenda
❖ DeFi Overview
➢ Intro to Decentralized Finance
➢ Innovation & Risks
❖ DeFi Analytics
➢ Supply-Side
➢ Demand-Side
➢ ITB’s Data-Driven Approach
2

3. 1
Overview of
DeFi
3

4. 44
DeFi Overview
Key characteristics
▸ Open
▸ Trustless
▸ Composable
Comparison vs FinTech
Main use cases
▸ Lending/borrowing
▸ Derivatives
▸ Decentralized
exchanges
▸ Asset mgmt
▸ Payments

5. Before the Term “DeFi” Existed...
▸ Bitcoin
▸ Open Finance
▸ MakerDAO
▸ ETHLend
▸ Kyber
▸ Salt Lending
▸ Invictus Innovations (BitShares)
5

6. Innovation
▸ Aligning incentives without a central party
▸ Utility tokens vs DeFi “tokenomics”
▸ A step towards banking the unbanked
▸ Next step: tokenizing real-world assets
6

7. 7
▸ “Liquidity begets liquidity”
▸ Rocket fuel for liquidity
▸ Synthetix sEth/ETH Uniswap pool
▸ Distribute governance rights
▸ Potential value accrual for token holders
▸ Issues with ‘over-incentivizing’
Liquidity Mining (aka Yield Farming)

8. COMP Case Study
▸ 20k+ token holders
▸ ~1k voting addresses
8
▸ Liquidity ‘locked’ 8x
▸ Artificial liquidity supplied*

9. COMP Case Study
Unintended consequences
▸ Demand for low market cap
tokens (driving prices)
▸ Users gaming the system
▸ Few incentives to hold COMP
9

10. Risks & Mitigation
▸ Hacks/Exploits
▸ Unpegging of stablecoins
▸ Liquidations
▸ Downsides to composability
▸ “Bad harvests”
10

11. 2
DeFi Analytics
11

12. Current State of DeFi Tokens
12
DeFi Protocol (Token) YTD Return Return since March 16
MakerDAO (MKR) 33% 178%
Synthetix (SNX) 296% 965%
Compound (COMP) 49%* 49%*
Aave (LEND) 1742% 1568%
Kyber (KNC) 736% 278%

13. Total Value Locked
▸ Unifying supply-side metric
▸ Limitations
▹ USD vs token terms
▹ ≠ more users, adoption
▹ Demand for incentives vs
demand for protocols
▹ Most collateral isn’t
“useful”
▸ Dollar value trusted into DeFi
protocols
13

14. Demand-side Metrics
▸ Vary by use case
▸ DEXs require liquidity
▹ Volume (in $ and tokens)
▹ Transactions
14

15. Demand-side Metrics - Lending Protocols
▸ Loans Outstanding
▸ Active users (weekly, monthly)
▸ Unique lenders
15

16. What We Are Doing…

17. ITB Insights
▸ Revamped Insights section
▹ Moving articles within a separate section
▹ Elaborate insights about general categories
▸ For DeFi section
▹ Provide overview about protocols’ usage and adoption
▹ Generalized insights about DeFi tokens
▹ Info and tips on usability
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18. Preview of ITB Insights
https://www.figma.com/proto/69ZcpYDkmh7KiMFyk1wUap/intotheblock?node-
id=910%3A441&viewport=-610%2C1054%2C0.33254939317703247&scaling=min-zoom
*Work in progress
18

19. Other Ideas We’re Looking Into
▸ Liquidity pool flows
▸ ERC20 ↔ ETH flows
▸ DeFi / Ethereum
▸ Daily ETH spent in gas
▸ Gas costs analyses
19

20. ▸ DeFi is offering a glimpse of a new financial infrastructure
▸ Expectations may be getting ahead of themselves
▸ Liquidity mining incentives may not be sustainable
▸ Several risks and unintended consequences
▸ Analytics are helpful to differentiate hype from value
20
Conclusions

21. 2121

22. INTRODUCING
CONTACT INFORMATION
Lucas Outumuro
Senior Analyst
Email: loutumuro@intotheblock.io
Twitter: @LucasOutumuro
Thank you! Do you have any
Questions/Feedback?