The market is devoid of price volatility, but the user sentiment has contrastingly been quite volatile. Market participants have started crawling back into the DeFi arena. In this article, we will delve into the state of a few metrics to get an insight into where the market is heading.
DeFi Mindshare:
DeFi is back to being the talk of town. Earlier this week, this sector ended up flipping meme coins for mindshare, which indeed is a feat in itself this cycle.
At the moment, artificial intelligence is the leading narrative, while real-world assets, data availability, and liquid staking derivatives have also managed to cement their positions in the top 10. Layer2s, zero-knowledge proofs, GameFi, and ETFs, on the other hand, have lost some steam of late.
DEX Users:
Trading activity on decentralized exchanges has also noted a sharp rise. At the moment, there are more than 11 million monthly active traders on DEXs. A recent analysis by Token Terminal pointed out that Uniswap’s market share has been “rapidly increasing due to L2s in general, and Base in particular.”
Typically, an address is considered to be active when it becomes a direct participant in a successful transaction. More often than not, the higher the number, the better, for it hints towards refining participation by users. The current uptrend in play is a fairly encouraging sign for the overall health of DeFi.
The Ultimate Crossover:
The DEX to CEX trade volume ratio is another interesting metric that gives an insight into the macro picture, i.e. how decentralized exchanges are faring against their centralized counterparts. As such, the said ratio is derived by dividing the aggregate volume of the former by that of the latter.
According to CoinGecko and The Graph’s data compiled by The Block, the DEX:CEX spot trading ratio has registered its largest spike ever this month. The reading of this metric stood at 7.99% in May. With just three weeks into June, the number is already at the brink of 20%, a historic high.
The Bottom Line
Evidently, most DeFi metrics have been improving of late. Due credits need to be given to consumer-facing protocol launches, liquidity, volatility, and airdrop farming, as well as application testing for driving-in users within the DeFi arena.
However, there are gray linings as well. Consider this: Data from a Dune Analytics dashboard pointed out that with the departure of airdrop farmers, LayerZero daily transactions have dropped by more than 90% from their peak levels. Thus, the focus now needs to shift to the retention aspect.
While DeFi’s climb up the ladder has been nothing short of impressive, it remains imperative for it to renew its streak and wade off obstacles on its path.
