{"id":55479,"date":"2022-01-04T10:00:00","date_gmt":"2022-01-04T08:00:00","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=55479"},"modified":"2025-09-04T01:41:44","modified_gmt":"2025-09-03T22:41:44","slug":"defi-chronicles-2021-prospects-for-the-financial-lego","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/defi-chronicles-2021-prospects-for-the-financial-lego\/","title":{"rendered":"DeFi Chronicles 2021: Prospects for the &#8216;Financial LEGO&#8217;"},"content":{"rendered":"<p>In 2021, the DeFi segment continued its rapid growth. Against the backdrop of Ethereum scalability issues, a multitude of <a href=\"https:\/\/u1f987.com\/en\/news\/the-binance-smart-chain-case-why-users-choose-low-fees-over-decentralisation\">alternative protocols<\/a> and <a href=\"https:\/\/u1f987.com\/en\/news\/what-is-a-layer%e2%80%912-solution-in-blockchain\">second-layer solutions<\/a> emerged, offering fast and inexpensive transactions.\u00a0<\/p>\n<p><!--more--><\/p>\n<p>Active development of the sector opened up new use cases: <a href=\"https:\/\/u1f987.com\/en\/news\/a-safe-harbour-in-defis-rough-seas-how-fixed-rate-lending-protocols-are-evolving\">fixed-yield protocols<\/a>, <a href=\"https:\/\/u1f987.com\/en\/news\/algorithmic-stablecoins-how-alternatives-to-usdt-and-usdc-are-evolving\">algorithmic stablecoins<\/a>, <a href=\"https:\/\/u1f987.com\/en\/news\/financial-alchemy-how-to-boost-income-with-uniswap-v3-liquidity-managers\">concentrated-liquidity managers<\/a> and <a href=\"https:\/\/u1f987.com\/en\/news\/crypto-indices-how-to-invest-in-defi-analogues-of-the-sp-500\">decentralised indices<\/a>. The <a href=\"https:\/\/u1f987.com\/en\/news\/defi-2-0-how-next-generation-decentralized-protocols-are-evolving\">\u201cDeFi 2.0 concept\u201d<\/a> gained popularity, focused on capital efficiency, stability of the native token and the building of cohesive communities.<\/p>\n<p>ForkLog summarised the main aspects and trends in DeFi development in 2021, with a focus on the segment\u2019s future prospects.<\/p>\n<h2 class=\"wp-block-heading\">Key Points<\/h2>\n<div class=\"wp-block-text-wrappers-keypoints article_keypoints\">\n<ul class=\"wp-block-list\">\n<li>The DeFi sector continues to grow \u2014 new, often complex projects constantly appear. Many involve interaction with different protocols and second-layer solutions.<\/li>\n<li>A strong momentum to development came from algorithmic stablecoins, wrapped assets, yield aggregators and privacy-oriented solutions like Tornado Cash.<\/li>\n<li>Despite the abundance of new products, lending and decentralised exchanges remain core elements of the DeFi ecosystem.<\/li>\n<\/ul>\n<\/div>\n<h2 class=\"wp-block-heading\">Macro View<\/h2>\n<p>The total value locked in DeFi protocols (TVL) since the start of the year rose more than tenfold \u2014 from $18.65 billion to $246.38 billion (as of 1.01.2022).<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1004\" height=\"349\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/1-DeFi-Llama.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160693\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/1-DeFi-Llama.png 1004w, https:\/\/u1f987.com\/wp-content\/uploads\/1-DeFi-Llama-300x104.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/1-DeFi-Llama-768x267.png 768w\" sizes=\"auto, (max-width: 1004px) 100vw, 1004px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/defillama.com\/\">DeFi Llama<\/a>.<\/figcaption><\/figure>\n<p>Despite the rapid development of structured products in the \u201cfinancial LEGO\u201d, the majority of user assets remain concentrated in relatively straightforward lending protocols and liquidity pools on decentralised exchanges based on the automated market maker mechanism (AMM).<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"742\" height=\"496\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/2-TVL-po-osnovnym-sektoram-DeFi-ekosistemy-na-baze-Ethereum-4.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160694\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/2-TVL-po-osnovnym-sektoram-DeFi-ekosistemy-na-baze-Ethereum-4.png 742w, https:\/\/u1f987.com\/wp-content\/uploads\/2-TVL-po-osnovnym-sektoram-DeFi-ekosistemy-na-baze-Ethereum-4-300x201.png 300w\" sizes=\"auto, (max-width: 742px) 100vw, 742px\" \/><figcaption class=\"wp-element-caption\">TVL by major DeFi sectors on Ethereum. Data: <a href=\"https:\/\/defipulse.com\/\">DeFi Pulse<\/a>, analytical <a href=\"https:\/\/u1f987.com\/en\/news\/november-2021-in-figures-boba-network-debut-planb-model-questioned-and-metaverse-token-rally\">ForkLog report for November 2021<\/a>.<\/figcaption><\/figure>\n<p>The aggregate market capitalisation of DeFi tokens relative to the overall crypto market remains modest \u2014 below 1.5%. Yet this could signal substantial growth potential for the sector.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"537\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/3-defi-dominance-1024x537.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160695\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/3-defi-dominance-1024x537.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/3-defi-dominance-300x157.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/3-defi-dominance-768x403.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/3-defi-dominance-1536x806.png 1536w, https:\/\/u1f987.com\/wp-content\/uploads\/3-defi-dominance-2048x1075.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: CoinGecko, <a href=\"https:\/\/www.theblockcrypto.com\/data\/decentralized-finance\/asset-management\/defi-dominance\">The Block<\/a>.<\/figcaption><\/figure>\n<p><a href=\"https:\/\/u1f987.com\/en\/news\/crypto-indices-how-to-invest-in-defi-analogues-of-the-sp-500\">DeFi Pulse Index<\/a> (DPI), consisting of the DeFi blue chips (AAVE, BAL, UNI, MKR, COMP, etc.), outpaced Bitcoin growth for most of the year, while lagging Ethereum.<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"517\" height=\"241\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/4-DPI-ROI.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160696\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/4-DPI-ROI.png 517w, https:\/\/u1f987.com\/wp-content\/uploads\/4-DPI-ROI-300x140.png 300w\" sizes=\"auto, (max-width: 517px) 100vw, 517px\" \/><figcaption class=\"wp-element-caption\">ROI from DPI investments. Data: <a href=\"https:\/\/messari.io\/asset\/defipulse-index\">Messari<\/a>.<\/figcaption><\/figure>\n<p>The surge in ETH price in 2021 was largely driven by DeFi. This is because the second-largest cryptocurrency is used to pay gas. And as activity in the sector grows, so does demand for ETH. <\/p>\n<p>Ethereum remains the backbone of DeFi, but alternative ecosystems such as Binance Smart Chain (BSC), Terra, Avalanche, <a href=\"https:\/\/u1f987.com\/en\/news\/what-is-solana-sol\">Solana<\/a>, <a href=\"https:\/\/u1f987.com\/en\/news\/what-is-polygon-matic\">Polygon<\/a> and <a href=\"https:\/\/u1f987.com\/en\/news\/what-is-fantom-ftm\">Fantom<\/a> are gaining traction.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"642\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/6-DeFi-Llama-1024x642.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160697\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/6-DeFi-Llama-1024x642.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/6-DeFi-Llama-300x188.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/6-DeFi-Llama-768x481.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/6-DeFi-Llama.png 1374w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/defillama.com\/chains\">DeFi Llama<\/a> as of 2.01.2022.<\/figcaption><\/figure>\n<p>Capital flows between protocols are boosted by <a href=\"https:\/\/u1f987.com\/en\/news\/what-are-cross-chain-bridges\">cross-chain bridges<\/a>. They enable users to move funds across platforms built on different technologies, selecting pools with higher yields.<\/p>\n<h2 class=\"wp-block-heading\">Decentralised Exchanges<\/h2>\n<p>The decentralised exchange Uniswap plays a central role in the DeFi sector, being one of the first to implement and popularise the automated market maker mechanism.<\/p>\n<p>Active users on the leading DEX exceeded 1 million for the first time in May. The platform 1inch achieved this milestone in December.<\/p>\n<p><script async=\"\" src=\"https:\/\/telegram.org\/js\/telegram-widget.js?15\" data-telegram-post=\"forklog\/23162\" data-width=\"100%\"><\/script><\/p>\n<p>Uniswap consistently outperforms other popular protocols in terms of revenue.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"537\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/7-defi-protocols-revenues-monthly-1024x537.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160699\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/7-defi-protocols-revenues-monthly-1024x537.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/7-defi-protocols-revenues-monthly-300x157.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/7-defi-protocols-revenues-monthly-768x403.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/7-defi-protocols-revenues-monthly-1536x806.png 1536w, https:\/\/u1f987.com\/wp-content\/uploads\/7-defi-protocols-revenues-monthly-2048x1075.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/www.theblockcrypto.com\/data\/decentralized-finance\/protocol-revenue\/defi-protocols-revenues-monthly\">The Block<\/a>.<\/figcaption><\/figure>\n<p>Along with SushiSwap, Uniswap has one of the lowest market-cap-to-revenue ratios among major protocols. This suggests the protocol is actively used, generates stable income, and that the UNI token is unlikely to be overvalued.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"537\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/9-marketcap-annualized-revenue-ratio-1024x537.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160700\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/9-marketcap-annualized-revenue-ratio-1024x537.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/9-marketcap-annualized-revenue-ratio-300x157.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/9-marketcap-annualized-revenue-ratio-768x403.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/9-marketcap-annualized-revenue-ratio-1536x806.png 1536w, https:\/\/u1f987.com\/wp-content\/uploads\/9-marketcap-annualized-revenue-ratio-2048x1075.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/www.theblockcrypto.com\/data\/decentralized-finance\/protocol-revenue\/marketcap-annualized-revenue-ratio\">The Block<\/a>.<\/figcaption><\/figure>\n<p>In the second half of the year Curve, which supports multiple networks, overtook Uniswap by TVL. Competition with PancakeSwap \u2014 the largest DEX ecosystem on Binance Smart Chain \u2014 also intensified.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"413\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/8-Dexes-TVL-Rankings-1024x413.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160701\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/8-Dexes-TVL-Rankings-1024x413.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/8-Dexes-TVL-Rankings-300x121.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/8-Dexes-TVL-Rankings-768x309.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/8-Dexes-TVL-Rankings.png 1318w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: DeFi Llama <a href=\"https:\/\/defillama.com\/protocols\/dexes\">Dexes<\/a> as of 2.01.2022.<\/figcaption><\/figure>\n<p>Yet a potential new growth driver for Uniswap could be its integration with the Polygon protocol, which in early October <a href=\"https:\/\/u1f987.com\/en\/news\/polygon-surpasses-ethereum-in-active-addresses\">surpassed Ethereum<\/a> in active addresses.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">\ud83d\uddf3 The Uniswap community has voted to deploy v3 on <a href=\"https:\/\/twitter.com\/0xPolygon?ref_src=twsrc%5Etfw\">@0xPolygon<\/a> through the governance process. <\/p>\n<p>\u26a1\ufe0f Uniswap Labs will deploy Uniswap v3 contracts within a few days. <\/p>\n<p>\ud83d\udc40 Stay tuned. <a href=\"https:\/\/t.co\/LwVLwEngPl\">pic.twitter.com\/LwVLwEngPl<\/a><\/p>\n<p>\u2014 Uniswap Labs \ud83e\udd84 (@Uniswap) <a href=\"https:\/\/twitter.com\/Uniswap\/status\/1472200289919053826?ref_src=twsrc%5Etfw\">December 18, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Among users, liquidity-aggregator platforms are popular, led by 1inch.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"537\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/10-dex-aggregator-market-share-1024x537.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160703\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/10-dex-aggregator-market-share-1024x537.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/10-dex-aggregator-market-share-300x157.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/10-dex-aggregator-market-share-768x403.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/10-dex-aggregator-market-share-1536x806.png 1536w, https:\/\/u1f987.com\/wp-content\/uploads\/10-dex-aggregator-market-share-2048x1075.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: DeBank, <a href=\"https:\/\/www.theblockcrypto.com\/data\/decentralized-finance\/dex-non-custodial\/dex-aggregator-market-share\">The Block<\/a>.<\/figcaption><\/figure>\n<p>However, the market share of ParaSwap is growing, which in November <a href=\"https:\/\/u1f987.com\/en\/news\/paraswap-launches-governance-token-airdrop\">conducted a controversial airdrop of its native token<\/a>.<\/p>\n<h2 class=\"wp-block-heading\">Lending Protocols<\/h2>\n<p>Lending protocols remain among the core components of DeFi. They offer passive income on invested funds and allow borrowing crypto assets (mainly stablecoins) at rates suitable for developing markets.<\/p>\n<p>As of 2.01.2022, the top three lending protocols are:<\/p>\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/u1f987.com\/en\/news\/what-is-aave\">Aave<\/a> with TVL of $14.4 billion, supporting Ethereum, Avalanche and Polygon;<\/li>\n<li>Anchor ($9.04 billion) on Terra;<\/li>\n<li><a href=\"https:\/\/u1f987.com\/en\/news\/what-is-compound-comp\">Compound<\/a> ($8.85 billion) \u2014 a veteran on Ethereum.<\/li>\n<\/ul>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"413\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/11-Lendiing-TVL-Rankings-1024x413.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160704\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/11-Lendiing-TVL-Rankings-1024x413.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/11-Lendiing-TVL-Rankings-300x121.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/11-Lendiing-TVL-Rankings-768x310.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/11-Lendiing-TVL-Rankings.png 1317w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Top-10 lending protocols. Data <a href=\"https:\/\/defillama.com\/protocols\/lending\">DeFi Llama<\/a> as of 2.01.2022.<\/figcaption><\/figure>\n<p>As the chart below shows, at the start of the year lending rates on Compound were relatively high and volatile.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"537\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/12-compound-borrow-rates-1024x537.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160705\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/12-compound-borrow-rates-1024x537.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/12-compound-borrow-rates-300x157.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/12-compound-borrow-rates-768x403.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/12-compound-borrow-rates-1536x806.png 1536w, https:\/\/u1f987.com\/wp-content\/uploads\/12-compound-borrow-rates-2048x1075.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: Compound, <a href=\"https:\/\/www.theblockcrypto.com\/data\/decentralized-finance\/cryptocurrency-lending\/compound-borrow-rates\">The Block<\/a>.<\/figcaption><\/figure>\n<p>As the market cooled toward mid-year, volatility declined. It is also notable that lending rates on stablecoins are markedly higher than those for ETH, WBTC or UNI.\u00a0<\/p>\n<p>In the crypto-lending space, traditional platforms offering \u201cover-collateralised\u201d loans dominate. Yet second-generation protocols such as <a href=\"https:\/\/u1f987.com\/en\/news\/defi-2-0-how-next-generation-decentralized-protocols-are-evolving\">Alchemix and Abracadabra<\/a> are gaining traction. They aim for higher capital efficiency and fewer liquidations.<\/p>\n<p>Progressively, protocols with fixed rates are developing, but their share of the market remains small.<\/p>\n<h2 class=\"wp-block-heading\">Derivatives<\/h2>\n<p>Among decentralised derivatives protocols, dYdX is the undisputed leader, with the highest liquidity and user counts.<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"920\" height=\"759\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/13-Perpetuals.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160706\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/13-Perpetuals.png 920w, https:\/\/u1f987.com\/wp-content\/uploads\/13-Perpetuals-300x248.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/13-Perpetuals-768x634.png 768w\" sizes=\"auto, (max-width: 920px) 100vw, 920px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/debank.com\/projects?tag=perpetuals\">DeBank<\/a> as of 2.01.2022.<\/figcaption><\/figure>\n<p>dYdX also ranks highly for TVL among second-layer solutions.<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"984\" height=\"411\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/14-l2beat.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160707\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/14-l2beat.png 984w, https:\/\/u1f987.com\/wp-content\/uploads\/14-l2beat-300x125.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/14-l2beat-768x321.png 768w\" sizes=\"auto, (max-width: 984px) 100vw, 984px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/l2beat.com\/\">L2BEAT<\/a> as of 2.01.2022.<\/figcaption><\/figure>\n<p>The platform\u2019s success owes much to a generous airdrop and the preceding launch of perpetual swaps on a second-layer protocol. In September, dYdX surpassed Coinbase by trading volume, echoing Uniswap\u2019s earlier success. <\/p>\n<p>The chart below shows that among crypto-derivative platforms, May saw Perpetual Protocol leading in volume, while August saw dYdX take the lead.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"537\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/15-perpetual-protocol-trade-volume-1024x537.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160708\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/15-perpetual-protocol-trade-volume-1024x537.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/15-perpetual-protocol-trade-volume-300x157.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/15-perpetual-protocol-trade-volume-768x403.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/15-perpetual-protocol-trade-volume-1536x806.png 1536w, https:\/\/u1f987.com\/wp-content\/uploads\/15-perpetual-protocol-trade-volume-2048x1075.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/www.theblockcrypto.com\/data\/decentralized-finance\/derivatives\/perpetual-protocol-trade-volume\">The Block<\/a>.<\/figcaption><\/figure>\n<p>Notably, autumn has brought a decline in turnover for dYdX, Perpetual Protocol and Futureswap. Relatively small TVL figures exist for decentralized options protocols. The top three are Ribbon Finance, Opyn and Lyra.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"525\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/16-Options-TVL-Rankings-1024x525.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160709\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/16-Options-TVL-Rankings-1024x525.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/16-Options-TVL-Rankings-300x154.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/16-Options-TVL-Rankings-768x394.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/16-Options-TVL-Rankings.png 1316w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/defillama.com\/protocols\/options\">DeFi Llama<\/a> as of 2.01.2022.<\/figcaption><\/figure>\n<p>Decentralised options \u2014 though fairly complex, they are interesting instruments. For sophisticated investors they open new strategies, and for projects \u2014 broad opportunities for integrations.\u00a0<\/p>\n<p>Interfaces on some platforms are not user-friendly yet. It is also clear that many services lack liquidity.\u00a0<\/p>\n<p>Nevertheless, decentralised options are a natural stage in the evolution of the crypto industry and DeFi. These platforms still must mature and prove themselves as effective hedging and speculative tools.<\/p>\n<h2 class=\"wp-block-heading\">Structured Products<\/h2>\n<p>As DeFi develops, more advanced tools emerge, including second-order protocols. This category includes overlay projects that sit on top of other services. Such platforms are designed for:<\/p>\n<ul class=\"wp-block-list\">\n<li>automation of certain functions;<\/li>\n<li>increasing yield, for example through compounding accrued interest;<\/li>\n<li>expanding the functionality of base platforms.<\/li>\n<\/ul>\n<p>In this sector Convex Finance leads as a yield aggregator. Launched in May, the protocol reached a TVL of $20 billion.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"406\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/17-Yield-TVL-Rankings-1024x406.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160710\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/17-Yield-TVL-Rankings-1024x406.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/17-Yield-TVL-Rankings-300x119.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/17-Yield-TVL-Rankings-768x304.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/17-Yield-TVL-Rankings.png 1323w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/defillama.com\/protocols\/yield\">DeFi Llama<\/a>.<\/figcaption><\/figure>\n<p>Convex Finance \u2014 a decentralised staking service built on the Curve protocol. It enables liquidity providers to increase staking yields without locking CRV tokens.<\/p>\n<p>yEarn Finance, from the renowned Andre Cronje, was one of the first yield aggregators in DeFi. However, its TVL by the end of 2021 was much smaller than Convex Finance \u2014 \u201cjust\u201d $5.69 billion.<\/p>\n<p>A substantial rise in popularity occurred in the second half of the year for <a href=\"https:\/\/u1f987.com\/en\/news\/defi-2-0-how-next-generation-decentralized-protocols-are-evolving\">Tranchess<\/a>, offering structured products for investors with varying risk appetites. Among BSC platforms the project ranks 3rd by TVL.<\/p>\n<p>Into a separate category fall position optimisers for concentrated liquidity like Charm, Gelato and Popsicle Finance. These platforms aim to boost yields for Uniswap v3 liquidity providers and reduce <a href=\"https:\/\/u1f987.com\/en\/news\/what-is-impermanent-loss-il\">impermanent losses<\/a>.<\/p>\n<h2 class=\"wp-block-heading\">Algorithmic Stablecoins and Wrapped Assets<\/h2>\n<p>In the DeFi space centralised stablecoins such as USDT, USDC and BUSD dominate. Also popular are decentralised alternatives \u2014 <a href=\"https:\/\/u1f987.com\/en\/news\/what-are-makerdao-mkr-and-the-dai-stablecoin\">DAI from Maker<\/a> and <a href=\"https:\/\/u1f987.com\/en\/news\/defi-2-0-how-next-generation-decentralized-protocols-are-evolving\">MIM from Abracadabra<\/a>.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"537\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/18-share-of-total-stablecoin-supply-1-1024x537.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160711\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/18-share-of-total-stablecoin-supply-1-1024x537.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/18-share-of-total-stablecoin-supply-1-300x157.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/18-share-of-total-stablecoin-supply-1-768x403.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/18-share-of-total-stablecoin-supply-1-1536x806.png 1536w, https:\/\/u1f987.com\/wp-content\/uploads\/18-share-of-total-stablecoin-supply-1-2048x1075.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: Coin Metrics, <a href=\"https:\/\/www.theblockcrypto.com\/data\/decentralized-finance\/stablecoins\/share-of-total-stablecoin-supply\">The Block<\/a>.<\/figcaption><\/figure>\n<p>Centralised stablecoins carry regulatory risks and counterparty risk. In September, the US Senate <span data-descr=\"called for the full backing of stablecoins with cash and cash equivalents, and the case for regular audits\" class=\"old_tooltip\">stated the need<\/span> for full collateralisation of stablecoins with cash and equivalents and for regular audits.<\/p>\n<p>Counterparty risk means that users must trust the issuer to back the tokens with reserves held by a reliable custodian.<\/p>\n<p>DAI tokens are effectively a collateralised debt position at MakerDAO. The system is characterised by low capital efficiency, since collateral always exceeds the loan size. In other words, to generate a certain amount of DAI you must lock up a much larger amount in other crypto-assets.<\/p>\n<p>In response to regulatory risks and inefficiencies of centralised and over-collateralised stablecoins, algorithmic \u201cstablecoins\u201d have emerged.<\/p>\n<p>Projects resembling automated central banks use algorithms to manage the supply of assets and their underlying economics.\u00a0<\/p>\n<p>The indisputable leader in this sector is the Terra project\u2019s UST \u2014 an asset-backed stablecoin pegged to the LUNA ecosystem. Unlike many other algorithmic stablecoins such as AMPL, BAC, UST benefits from high market capitalisation ( <a href=\"https:\/\/www.coingecko.com\/en\/coins\/terra-usd\">more than $10 billion<\/a>) and price stability.<\/p>\n<p>However, even UST can detach from its peg. For example, during May\u2019s LUNA collapse, the stablecoin price dipped 3.8% before returning to parity with the dollar.<\/p>\n<p>With ecosystem development and strong demand for Terra\u2019s stablecoin, the native token LUNA rose to the 9th place in market-cap rankings, overtaking Avalanche, Polkadot and Dogecoin.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"177\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/19-Terra-1024x177.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160712\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/19-Terra-1024x177.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/19-Terra-300x52.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/19-Terra-768x133.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/19-Terra.png 1274w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/www.coingecko.com\/en\/coins\/all\">CoinGecko<\/a> as of 2.01.2022.<\/figcaption><\/figure>\n<p>Beyond stablecoins, development of so-called \u201clow-volatility tokens\u201d continues, including RAI from Reflexer and OHM from Olympus DAO. The latter\u2019s market cap exceeds $2 billion. These assets feature supply-control mechanics that respond to demand shocks.<\/p>\n<p>The tokenised BTC segment also continues to grow. Its supply rose from 140,000 to 329,477 since year-start (as of 1.01.2022). This accounts for 1.74% of Bitcoin\u2019s circulating supply. The combined market cap of \u201cBTC on Ethereum\u201d exceeds $15 billion.<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"889\" height=\"574\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/20-WBTC.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160713\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/20-WBTC.png 889w, https:\/\/u1f987.com\/wp-content\/uploads\/20-WBTC-300x194.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/20-WBTC-768x496.png 768w\" sizes=\"auto, (max-width: 889px) 100vw, 889px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/defipulse.com\/btc\">DeFi Pulse<\/a>.<\/figcaption><\/figure>\n<p>The share of Wrapped Bitcoin (WBTC) among leaders in the segment stands at 78.16%. A significant portion of WBTC is locked as collateral in lending protocols such as Maker, Compound and Aave.<\/p>\n<p>The BTCB token \u2014 a BEP-20 token pegged to Bitcoin \u2014 gained notable traction in 2021. In early November its market cap surpassed $7 billion. More than 10% of BTCB supply is locked in the lending protocol Venus. Its TVL is around $2 billion. BTCB also plays a key role in Tranchess, with TVL above $1 billion.<\/p>\n<h2 class=\"wp-block-heading\">Developing Segments<\/h2>\n<p>On 1 December 2020, the launch of Ethereum 2.0 Phase Zero occurred, marking the start of Ethereum\u2019s gradual transition to a Proof-of-Stake consensus. Users can deposit ETH into the staking contract, becoming validators or delegating to other network participants. <\/p>\n<p>Since the launch, users have sent 8.86 million ETH to the deposit contract. As of 2.01.2022 they are valued at about $33.28 billion.<\/p>\n<h3 class=\"wp-block-heading\">Liquid Staking<\/h3>\n<p>Alongside the deposit contract, solutions for liquid staking emerged. One of the largest services \u2014 <a href=\"https:\/\/u1f987.com\/en\/news\/lido-finance-raises-2-million-to-advance-ethereum-2-0-infrastructure\">Lido<\/a> \u2014 offers the ability to unlock ETH staked in order to use it in DeFi apps. The project uses the native token sETH, representing a tokenised version of the staked assets in the Ethereum 2.0 ecosystem.<\/p>\n<p>The total value of assets staked in Lido exceeds $12 billion. In addition to Ethereum 2.0, the service allows staking LUNA to obtain bLUNA with an 8% annual yield. It is also possible to lock Solana to obtain stSOL.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"307\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/21-Lido-1024x307.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160714\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/21-Lido-1024x307.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/21-Lido-300x90.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/21-Lido-768x231.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/21-Lido.png 1326w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/lido.fi\/\">Lido<\/a>.<\/figcaption><\/figure>\n<h3 class=\"wp-block-heading\">MEV<\/h3>\n<p>Among other developments, the Miner Extractable Value (MEV) concept \u2014 sometimes called the \u201cinvisible tax\u201d on Ethereum \u2014 gained traction.<\/p>\n<p>MEV refers to profits miners can earn by including, excluding or changing the order of transactions in blocks they produce.<\/p>\n<p>According to MEV-Explore, since the start of 2020 market participants have extracted MEV worth almost $900 million.<\/p>\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" loading=\"lazy\" decoding=\"\" width=\"815\" height=\"678\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/22-MEV-Cumulative.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160715\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/22-MEV-Cumulative.png 815w, https:\/\/u1f987.com\/wp-content\/uploads\/22-MEV-Cumulative-300x250.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/22-MEV-Cumulative-768x639.png 768w\" sizes=\"auto, (max-width: 815px) 100vw, 815px\" \/><figcaption class=\"wp-element-caption\">Cumulative MEV since 1.01.2020. Data: <a href=\"https:\/\/explore.flashbots.net\/\">Flashbots<\/a>.<\/figcaption><\/figure>\n<p>In the MEV revenue mix, more than 97% comes from arbitrage using multiple liquidity pools across DEXs. The remaining 3% comes from liquidation strategies and their combinations.<\/p>\n<p>Various services have emerged to minimise MEV-related losses. Among them:<\/p>\n<ul class=\"wp-block-list\">\n<li>decentralised exchange <a href=\"https:\/\/u1f987.com\/en\/news\/cows-in-the-dark-forest-a-review-of-the-cowswap-decentralized-exchange\">CowSwap<\/a> on the basis of Gnosis Protocol v2;<\/li>\n<li>KeeperDAO, using a private virtual mempool named Hiding Book;<\/li>\n<li>cross-chain platform Secret Swap on AMM;<\/li>\n<li>BackRunMe, a tool enabling confidential transactions resistant to front-running and sandwich attacks;<\/li>\n<li>TaiChi Network \u2014 a privacy-tinted transaction service managed by the SparkPool pool;<\/li>\n<li>mistX.io from Alchemist \u2014 a DEX built on Flashbots technology.<\/li>\n<li>MEV solution Fair Sequencing Services by Chainlink.<\/li>\n<\/ul>\n<h3 class=\"wp-block-heading\">Privacy<\/h3>\n<p>Tornado Cash \u2014 one of the most popular Ethereum mixers. The service\u2019s TVL rose from $55.5 million to $588 million (as of 2.01.2022). The peak was reached on 21 October at $1.17 billion.<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"903\" height=\"427\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/23-Tornado-Cash.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160716\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/23-Tornado-Cash.png 903w, https:\/\/u1f987.com\/wp-content\/uploads\/23-Tornado-Cash-300x142.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/23-Tornado-Cash-768x363.png 768w\" sizes=\"auto, (max-width: 903px) 100vw, 903px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/defillama.com\/protocol\/tornado-cash\">DeFi Llama<\/a>.<\/figcaption><\/figure>\n<p>The service\u2019s popularity was boosted by airdrops of native TORN tokens, and by integration with the second-layer solution <a href=\"https:\/\/u1f987.com\/en\/news\/defi-reboot-how-arbitrum-became-ethereums-leading-layer-2-solution\">Arbitrum<\/a>. Recently the Tornado Cash team rolled out the Nova pool, which allows depositing and withdrawing arbitrary amounts of ETH.<\/p>\n<h3 class=\"wp-block-heading\">Insurance<\/h3>\n<p>This remains one of the few DeFi sectors showing lacklustre dynamics.<\/p>\n<p>A significant share of the market in this sector is held by two protocols \u2014 Armor and Nexus Mutual. TVL for each is close to $600 million (as of 2.01.2022), a relatively small figure compared with leading DEX and lending protocols.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"408\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/24-Insurance-TVL-Rankings-1024x408.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160717\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/24-Insurance-TVL-Rankings-1024x408.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/24-Insurance-TVL-Rankings-300x120.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/24-Insurance-TVL-Rankings-768x306.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/24-Insurance-TVL-Rankings.png 1324w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/defillama.com\/protocols\/insurance\">DeFi Llama<\/a>.<\/figcaption><\/figure>\n<p>According to Chainalysis, in 2021 criminals stole more than $7.7 billion in cryptocurrencies. More than a third of this was from rug pulls.<\/p>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"699\" height=\"427\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/25-Chain1.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160719\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/25-Chain1.png 699w, https:\/\/u1f987.com\/wp-content\/uploads\/25-Chain1-300x183.png 300w\" sizes=\"auto, (max-width: 699px) 100vw, 699px\" \/><figcaption class=\"wp-element-caption\">Data: <a href=\"https:\/\/blog.chainalysis.com\/reports\/2021-crypto-scam-revenues\/\">Chainalysis<\/a>.<\/figcaption><\/figure>\n<p>Cybercrime in crypto markets rose by 81% versus 2020.<\/p>\n<p>Rug-pull schemes spread widely across the DeFi ecosystem, accounting for more than $2.8 billion in losses in 2021. That represents 37% of all crypto-fraud revenues, compared with only 1% in 2020.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"848\" src=\"https:\/\/u1f987.com\/wp-content\/uploads\/26Chain2-1024x848.png\" alt=\"\u0425\u0440\u043e\u043d\u0438\u043a\u0438 DeFi 2021: \u043a\u0430\u043a\u0438\u0435 \u043f\u0435\u0440\u0441\u043f\u0435\u043a\u0442\u0438\u0432\u044b \u0443 \u00ab\u0444\u0438\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0433\u043e LEGO\u00bb\" class=\"wp-image-160720\" srcset=\"https:\/\/u1f987.com\/wp-content\/uploads\/26Chain2-1024x848.png 1024w, https:\/\/u1f987.com\/wp-content\/uploads\/26Chain2-300x248.png 300w, https:\/\/u1f987.com\/wp-content\/uploads\/26Chain2-768x636.png 768w, https:\/\/u1f987.com\/wp-content\/uploads\/26Chain2.png 1536w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">15 largest rug pulls in 2021. Data: <a href=\"https:\/\/blog.chainalysis.com\/reports\/2021-crypto-scam-revenues\/\">Chainalysis<\/a>.<\/figcaption><\/figure>\n<p>Chainalysis urged users to avoid new tokens that have not undergone code audits.<\/p>\n<h2 class=\"wp-block-heading\">Conclusions<\/h2>\n<p>DeFi continues to evolve \u2014 new protocols, second-layer solutions and cross-chain bridges are drawing capital into the ecosystem.<\/p>\n<p>The lending and DEX sectors remain the largest elements of the broad DeFi ecosystem. TVL in both sectors stays high thanks to ongoing liquidity inflows and a clear value proposition for many users. However, activity metrics on decentralised exchanges have lagged somewhat behind the May peaks.<\/p>\n<p>Demand for perpetual swaps platforms and yield-optimisers remains strong. In these sectors, dYdX and Perpetual Protocol lead, while Convex and yEarn Finance are prominent in their respective niches.\u00a0<\/p>\n<p>We are witnessing the evolution of structured products, with yield aggregators playing a notable role. It remains to be seen how robust liquidity will prove in a bear market for these complex platforms.<\/p>\n<p>Users of DeFi have seen the emergence of nascent sectors, including liquid staking, MEV and privacy tools. Yet not all areas saw growth \u2014 synthetic assets and insurance showed stagnation amid an overall uptrend.\u00a0<\/p>\n<p>In 2021, algorithmic stablecoins and \u201clow-volatility tokens\u201d appeared. Not all of them proved viable, as shown by significant price volatility.<\/p>\n<p>Demand for established centralised stablecoins and tokenised BTC continued to grow. This signals healthy expansion for the DeFi sector and the broader crypto market alike.<\/p>\n<p>Subscribe to ForkLog\u2019s channel on <a href=\"https:\/\/www.youtube.com\/channel\/UCC9FnXTC8_ENzaNSO5cHQ6g\" target=\"_blank\" rel=\"nofollow noopener\">YouTube<\/a>!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>ForkLog summarised the main aspects and trends in DeFi development in 2021, with a focus on the segment\u2019s future prospects.<\/p>\n","protected":false},"author":1,"featured_media":55480,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"5","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[1144],"tags":[80,1093,787,1097,807],"class_list":["post-55479","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-longreads","tag-dao","tag-defi","tag-dex","tag-lending","tag-stablecoins"],"aioseo_notices":[],"amp_enabled":true,"views":"34","promo_type":"1","layout_type":"5","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/55479","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=55479"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/55479\/revisions"}],"predecessor-version":[{"id":55481,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/55479\/revisions\/55481"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/55480"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=55479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=55479"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=55479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}