DAppTotal Research Report On DeFi Industry (First Half Of 2019)

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Contents
Executive Summary
1. Introduction
2. Status Quo And Major Trends In DeFi Industry
3. DeFi - Stablecoin
4. DeFi - Lending
5. DeFi - DEX
6. Overview of Leading DeFi Applications
7. Conclusion
References
About Us 
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Executive Summary
In this report we analyze the DeFi landscape in the first half of
2019, and provide in-detail data and analysis of DeFi applications
such as Stablecoins, Lending, and DEXs. DeFi industry started to
attract major attention in 2018, and becomes a much larger force
in 2019, with a total locked asset value of $1.49 Billion USD as of
06/30/2019, an almost five-fold increase from $302 Million on
01/01/2019.
- Currently most stablecoins are pegged to US dollar and issued
on the Ethereum blockchain. The usage of stablecoins has been
growing fast in the first half of 2019, and accelerated in April as
crypto prices rebounded. The daily on-chain transaction volume
reached $859M on 06/30, meaning the entire circulation of
stablecoins, about $5 Billion, may all change hands once in
every five, six days.
- DeFi lending is still a very young sector with only two years
history, but has been growing rapidly. The most borrowed
assets are DAI and WETH, and the total origination (Borrows +
Loans) increased from $34M in January to $544M in June, a
close to 16 times growing. At the same time, the total user base
is still small, monthly active user is only a few thousands, and the
lending feature set is quite limited.
- DEXs are still much smaller in scale comparing with centralized
exchanges. Their main value proposition is transparency and
security, while speed and liquidity are their major shortcomings.
For the time being they are mainly used to trade tokens not
listed on centralized exchanges. The total trading volume of
DEXs increased from $71M in January to $288M in June, and
the two of the fastest growing DEXs are Eth2dai and Uniswap.
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1. Introduction
Decentralized Finance, DeFi for short, also known as Open
Finance, is one of the most exciting developments in the
blockchain ecosystem in the recent two years. Essentially, DeFi
can be regarded as conventional finance on blockchain, especially
Ethereum blockchain for the time being.
By leveraging blockchain technologies, DeFi attempts to address
the primary shortcomings of the conventional/centralized finance,
namely Unequal Access, Censorship, Lack of Transparency, and
Counter-party Risk (the risk of a financial institution does not fulfill
its contractual obligations).
In DeFi system, users can retain the full control of their fund and
personal data while accessing censorship resistant financial
services, and the DeFi financial tools are open and permissionless,
users can access them anywhere in the world, an internet
connection is the only prerequisite. DeFi also provides vastly
improved transparency comparing to conventional finance, and
the financial agreements are arbitrated by smart contracts which
are executed automatically, eliminating much of the counter-party
risks by reducing the financial institutions’ involvement in many
transactions.
1.1 Total Locked Value of Leading DeFi Applications
DeFi industry can be further divided into categories such as
Stablecoin, Lending, Payment, Derivative, DEX (Decentralized
Exchange), and Asset, etc. In this report, we will give a overview
of the entire industry, then provide in-detail data and analysis of
three of the categories, Stablecoin, Lending, and DEX.
In 2018, DeFi started to gather attention from the media,
blockchain community, and the financial industry. Now in 2019, it
has become a much large force. As shown in Figure 1, the total
locked asset value of the DeFi industry kept getting bigger in the
first half of 2019 (1H 2019). On 01/01/2019, the total locked value
was $302 Million USD, then on 06/30/2019, it has grown to $1.49
Billion, with the bulk of them locked in EOS REX [1] and Maker [2].
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Figure 1. Total Locked Value of DeFi Applications in 1H 2019
According to our data from DAppTotal.com [3], as of 06/30, the
top 5 DeFi applications are EOS Rex, Maker, Edgeware [4],
Compound [5], and Dharma [6], as shown in Figure 2. If we look at
Lending only, the top tier applications (or Tier 1) are Maker,
Compound, Dharma, and dYdX [7], with a total locked asset value
of $278 Million on 01/01/2019, and $522 Million on 06/30/2019, as
shown in Figure 3.
Figure 2. Ranking of Top DeFi Applications From DAppTotal.com
The most prominent DeFi applications are stablecoins, lending,
and DEXs. Stablecoins and DEXs appeared a few years ago and
are playing increasing larger role in the blockchain universe, while
lending showed up more recently but is growing in a staggering
speed. In following sections, we will look into these three types of
DeFi applications and provide in-detail analysis of each of them. 
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Figure 3. Total Locked Value of Tier 1 DeFi Lending Applications
1.2 Methodology And Disclaimer
All data in this report is ultimately derived from public data on
blockchain, including Ethereum, and the data analysis part has
leveraged previous work done by DAppTotal team. In over a year’s
time, DAppTotal team have accumulated vast amount of
transaction and log data of leading public blockchains, generated
our own database, and built various tools for data analysis. This
report is one of the results based on DAppTotal blockchain
database and analysis software. The industry trend and prospect
discussion in the report are based on our data, understanding, and
opinion of the blockchain ecosystem and DeFi industry.
Disclaimer: The content provided in this report are based on our
best understanding and research, but due to the pseudo
anonymous nature of blockchains, the ﬁndings we present here
can not be guaranteed and assured to be accurate, and DAppTotal
can not be held responsible for any error, negligence, or damages
arising therefrom.
Furthermore, DAppTotal is not an investment advisor, broker, or
dealer, and we have no access to non-public information about
this research area. This report and the information contained
herein is therefore not intended to be a source of investment
advice or credit analysis.
 
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$0M
$150M
$300M
$450M
$600M
01-0101-0701-1301-1901-2501-3102-0602-1202-1802-2403-0203-0803-1403-2003-2604-0104-0704-1304-1904-2505-0105-0705-1305-1905-2505-3106-0606-1206-1806-2406-30
Maker Compound Dharma dYdX

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2. Status Quo And Major Trends In DeFi industry
To implement the blockchain’s main value proposition, one of the
most promising areas is the ﬁnancial industry, as Bitcoin and other
crypto currencies are natural candidates for store of value and tool
of payments. The emergence of DeFi is showing early proofs of
crypto currencies’ real utility and applicability.
DeFi industry can cover a wide range of areas, such as payment,
stablecoin, lending, DEX, and derivative, but the core of the
industry is related to asset movement (e.g., in lending). While
DEXs and stablecoins were started a few years back, DeFi lending
only emerged in the recent two years. The ﬁrst well known lending
platform is Maker, which was started in December 2017, being the
second largest DeFi application currently.
The largest DeFi application for now, EOS REX, which is only a
few months old, is a deposit platform on the EOS blockchain.
Both Maker and EOS REX are infrastructural-level platforms to
support the larger crypto economy, and together they account for
about 69% of the total assets locked by DeFi applications,
according to data from DAppTotal.com on 06/30 as shown in
Figure 4. This is a sign of currently limited scope and how young
the DeFi sector still is.
Figure 4. DeFi Total Holding Value and Market Share Graph (as of
6/30/2019)
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As in their early stage, current DeFi applications only offer limited
features. Maker platform only supports ETH as collateral and DAI
stablecoin as loan. EOS REX users can only deposit EOS or pay
EOS for renting resources on EOS blockchain.
Besides Maker and EOS REX, many DeFi applications were
launched since 2018 to offer other types of financial services, such
as Compound, a decentralized money market which started in
September 2018, where users can lend their crypto assets to earn
interest or borrow from the platform; Dharma, a peer-to-peer
lending platform, launched in April 2019, supports borrowing and
lending in multiple assets such as ETH, DAI, and USDC
stablecoin; And dYdX, a lending, margin trading, and derivatives
platform launched in September 2018, supports up to 4x leverage
trade of ETH, DAI, and USDC tokens.
The decentralized and geographically nonspecific nature of the
blockchain means that DeFi is open to a wider market of
customers than the traditional centralized finance, and offers
greater accountability and transparency. Although still in early
phase, as more DeFi applications coming online, we are seeing
tremendous growth of the DeFi industry in 2019, and a recent
trend of multiple applications working as a suite, e.g., DAI
borrowed in Maker can be lent out in Compound, or traded in
dYdX.
Currently DeFi is a very young industry, also only a small
percentage of people own crypto assets and DeFi applications
need crypto assets as collateral, so the user base of DeFi
applications is still relatively small. Therefore, the future challenge
of the DeFi industry still lies in the area of user education and the
continued mainstream adaptation of crypto currencies.
 
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3. DeFi - Stablecoin
Stablecoins is a type of crypto currencies meant to hold stable
value, designed to minimize price volatility relative to some asset
or basket of assets. Most stablecoins in the market are backed,
and pegged to one or more crypto currencies, ﬁat money, or
commodities such as gold, although some stablecoins are tied to
an algorithm and not backed by other assets.
The ﬁrst well known stablecoin is Tether (USDT) [8], which was
issued on the Bitcoin network on 10/06/2014, and it is still the
largest stablecoin today. Starting from late 2017 and early 2018,
many stablecoins were started to emerge and compete in this
space, such as TUSD, USDC, and DAI, etc, and here we call them
emerging stablecoins.
Figure 5. Stablecoins Market Share Graph
3.1 Stablecoin Market Data
Shown in Figure 5, as of 06/30, the total circulation supply of
stablecoins is $4.57 Billion USD, among them the circulation of
USDT is $3.68 Billion, occupying a commanding market share of
80.6%. Among the emerging stablecoins, USDC’s total circulation
is $366 Million, which is ranked number one with a 41.4% market
share among emerging stablecoins; TUSD is ranked number two
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with a circulation of $214 Million and 24.2% market share; PAX is
ranked number three, with a circulation of $164 Million and 18.5%
market share. Other emerging stablecoins, including DAI, GUSD,
EURS, nUSD, etc, occupy a market share of 15.9%.
Figure 6. The Total Circulation History Of Major Stablecoins
The total circulation supply of stablecoins was $2.76 Billion on
01/01/2019, and as crypto prices recovered around 04/01, the
issuance of various stablecoins were also accelerated. The market
share among major stablecoins have been relatively stable in
recent two months, as most of them have been issuing signiﬁcant
amount of new coins. Figure 6 shows the total circulation
numbers of major stablecoins starting from 01/01/2018. The
USDT circulation number is split into OMNI-USDT (issued on
Bitcoin network) and ERC20-USDT (issued on Ethereum network).
Figure 7. Stablecoins Daily Tx Count In 1H 2019
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Figure 8. Stablecoins Daily Volume In 1H 2019
Figure 7 and Figure 8 show the stablecoins daily on-chain
transaction numbers and total transaction volume in 1H 2019.
Both indicate significantly increased activities or velocities over the
last several months.
3.2 The State of Stablecoins
Currently, most stablecoins are issued on top of the Ethereum
blockchain, majority of them are pegged to, and one to one
backed by US dollars. The issuance of various stablecoins have
been accelerated in the recent months as crypto prices recover,
since the main usage of stablecoins is still for price hedging and
trading of other crypto currencies, and using them as a tool of
payments is still not developed yet.
Overall, the usage of stablecoins has been growing during the first
half of 2019, the daily on-chain transaction volume has increased
from $139M on 01/01 to $859M on 06/30, meaning the entire
stablecoin circulation may change hands once in five, six days.
The daily on-chain transaction count increased from 11K on 01/01
to 77K on 06/30.
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4. DeFi - Lending
The largest sector in the DeFi industry is lending, also called
secured lending, because the borrowers’ ability to borrow is based
on the value of collaterals, not their credit history. The lender or
the lending platform may liquidate the collaterals to repay the loan
in case of default.
DeFi lending protocols are designed to facilitate lending and
borrowing of digital assets, and enable instantaneous transaction
settlement of loans on public blockchains through smart contracts.
They also allow interoperation among diﬀerent DeFi applications
and participants.
Figure 9. Total Originations Market Share In 1H 2019
The four major lending protocols currently in the market are Maker,
Compound, Dharma (Since Dharma smart contract is not open
source and there is no public data available, Dharma data is not
included in this report), and dYdX. All of them operate on top of
the Ethereum network, Maker started the earliest, in December
2017, while the other three all started in 2018. Maker issues its
own stablecoin, i.e., DAI, which is pegged to US dollar, and the
others only enable the lending, borrowing, and trading of ETH and
existing ERC20 tokens.
Maker allows user to put up ETH as collateral and take out DAI as
loan; Compound allows user to put multiple assets as collateral
into a pool, and borrow from the pool also; Dharma facilitates
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peer-to-peer lending and borrowing; And dYdX is a lending and
margin trading platform of digital assets.
4.1 Data Analysis Of DeFi Lending Applications
In 1H 2019, the total originations (the sum of borrows and loans)
are $544M. Figure 9 and 10 show the total market share and
monthly originations in 1H 2019.
Figure 10. Monthly Originations In 1H 2019
The collateral ratio has been continuously healthy during the ﬁrst
half of this year. As shown in Figure 11, most of the time the ratio
is well above 200%. As of 06/30/2019, these lending applications
stay well-backed at around 400%.
Figure 11. The collateral ratio graph in 1H 2019
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The total borrowed amount in 1H 2019 are $286M, and Figure 12
and 13 show the market share and monthly borrows amounts.
Figure 12. Market Share of Total Borrows In 1H 2019
Figure 13. Monthly Borrows In 1H 2019
The total volume of loans in 1H 2019 are $256M. Figure 14 and 15
show the market share and monthly loans (Maker doesn’t oﬀer
loans), Figure 16 is the active loan outstanding graph, and Figure
17 shows the (accumulated) active users of the lending
applications in 1H 2019.
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Figure 14. Market Share of DeFi Loans In 1H 2019
Figure 15. Monthly Volume of Loans In 1H 2019
Figure 16. Active Loan Outstanding in 1H 2019
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Figure 17. (Accumulated) Active Users Of Lending Applications
4.2 The State of DeFi Lending
With only two years history, DeFi lending is very young sector, but
has been growing rapidly. The total borrows increased from $24M
from January to $173M in June, and total loans increased from
$9.6M in January to $256M in June. The most borrowed assets
are DAI and WETH, and the collateral ratio is around 400% at most
times, which is a quite conservative and safe for the system. On
the other hand, the total number of users is still small, and the
lending feature set is quite limited.
 
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5. DeFi - DEX
A DEX is a crypto currency exchange that operates on blockchain,
without a central authority, and it allows peer-to-peer trading of
crypto tokens without much of the KYC (Know-Your-Customer)
requirements. Since users may not need to transfer their assets
into exchanges, DEX can minimize the risk of asset loss from
exchange hackings. DEX can also prevent price manipulation or
fake trading volume because all the trading transactions are
recorded on blockchain.
In this section, we present our data and analysis of 17 major DEXs,
namely Eth2dai, IDEX, Kyber, Uniswap, ForkDelta, DDEX, The
Token Store, AirSwap, Radar Relay, Paradex, Bancor,
Tokenlon, Star Bit, LedgerDex, Bamboo Relay, The Ocean, and
TokenJar.
Figure 18. DEX Market Share Graph In 1H 2019
5.1 DEX Market Share And Trading Data
Comparing with centralized exchanges, the trading volume and
active users of DEXs are still relatively small. In 1H 2019, the top
DEX in trading volume is Eth2dai, with a market share of 27%. Its
total volume of the ﬁrst six months of 2019 is $256 Million USD, a
volume can be achieved by top centralized exchanges in a few
days; IDEX is the second largest, with a trading volume of $246
Million and market share of 26%; Kyber ranked number three with
a volume of $146 Million, and Uniswap is number four with a
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volume of $134 Million. Figure 18 shows the DEX market share
and ranking data in 1H 2019.
Figure 19 shows the DEX monthly trading volume, Figure 20 is the
DEX monthly number of trades, and Figure 21 is the monthly
active users among DEXs in 1H 2019.
Figure 19. DEX Monthly Trading Volume In 1H 2019
5.2 The State of DEXs
The total trading volume of DEXs is still small but growing quickly,
from $71M in January to $288M in June, and the two of the fastest
growing DEXs are Eth2dai and Uniswap. The total transaction
counts increased from 212K in January to 411K in June, and the
total monthly active users increased from 19K in January to 32K in
June.
The main value proposition of DEXs are transparency and security,
while speed and liquidity are the major shortcomings of DEXs for
now. Currently, DEXs are still much smaller in scale comparing to
centralized exchanges, and they are mainly used to trade tokens
not listed on centralized exchanges.
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Figure 20. DEX Monthly Transaction Numbers In 1H 2019
Figure 21. DEX Monthly Active Users (MAUs) In 1H 2019
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6. Overview Of Leading DeFi Apps
In this Section, we will give an overview and data snapshot of four
major DeFi applications, Maker, Compound, dYdX, and Edgeware.
Dharma is not included since it is not yet open-source and there is
no public data available.
6.1 Maker
The Maker platform was started in 12/18/2017, and they are also
the creator of DAI, a decentralized stablecoin based on Ethereum
and pegged to US Dollar. For the time being, the Maker platform
and DAI stablecoin have very limited real world usage beyond
margin lending for crypto trading.
The current version of Maker smart contract supports only ETH as
collateral, but its next MCD version will support multiple assets as
collateral, which is planned to be online by the end of year.
Here are a data snapshot of Maker and its borrows APR graph of
1H 2019.
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6.2 Compound V1 & V2
Launched in September 2018, Compound is a money market
platform, where users can lend their crypto assets to earn interest,
or borrow assets from the platform. Interest rates are adjusted
algorithmically based on the supply and demand for borrows and
loans.
Compound protocol Version 2 was released in May of 2019. Here
we provide snapshots for both the V1 and V2 protocols, and their
Borrows APR graphs.
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6.3 dYdX V1 and V2
dYdX is a lending, margin trading, and derivative platform, started
in September 2018, supports up to 4x leverage trade of ETH, DAI,
and USDC tokens.
dYdX protocol Version 2 was released in June of 2019. Here we
provide snapshots for both V1 and V2 protocols, and their
Borrows APR graphs.
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6.4 Edgeware
Edgeware is a high performance, WASM smart contract platform
built on top of Substrate/Polkadot technologies. The Edgeware
distribution model is termed “lock-drop”, which is a low cost way
to hedge your position in Ethereum. Users can lock their ETH into
a smart contract, and Edge tokens will be distributed to them
proportionally to the amount of ETH locked.
As of 06/30/2019, the total locked asset value of Edgeware is
$279 Million USD, and the following is the historical graph of the
locked asset value of Edgeware.
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6.5 A List of DeFi Applications From DAppTotal.com
Here is a comprehensive list of DeFi applications tracked by
DAppTotal.com:
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7. Conclusion
We are seeing amazing progress in the DeFi space recently, and in
this report we analyzed the status of DeFi industry in the ﬁrst half
of 2019, and provided in-detail data and analysis of DeFi
applications such as Stablecoins, Lending, and DEXs. DeFi
industry started to attract major attention in 2018, and becomes a
much larger force in 2019, with a total locked value of $1.49 Billion
USD as of 06/30/2019, an almost ﬁve-fold increase from $302
Million USD on 01/01/2019. As of 06/30, the top 5 DeFi
applications ranked by total locked value are EOS REX, Maker,
Edgeware, Compound, and Dharma.
 
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References
[1] EOS REX ofﬁcial site, https://eosauthority.com/rex
[2] MakerDAO website, https://makerdao.com/en/
[3] DAppTotal website, a platform of DApp data collection and analysis,
https://dapptotal.com/
[4] Edgeware website, https://edgewa.re/
[5] Compound website, https://compound.ﬁnance/
[6] Dharma website, https://www.dharma.io/
[7] dYdX website, https://dydx.exchange/
[8] Tether website, https://tether.to/
 
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About Us
DAppTotal is an industry leading and the most comprehensive
DApp analysis platform, with more than 3800 DApps listed
currently. DAppTotal team has developed 100+ diﬀerent indexes
and data indicators, and published research reports of DApp
ecosystem showing a more complete picture of blockchain
industry and users. DAppTotal responds in minutes to public
blockchain events with data monitoring and insightful analysis,
helps users to see the trends faster. We strive to help project
teams, media, and end users to better understand DApps and the
industry trends.
For more information, please contact us at:
contact@dapptotal.com
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