Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
The report estimates that the transaction volume in DApps in 2019 was $21 billion, meaning there has been a 1178% increase.
The year 2020 was a perfect one for the growth of the Decentralized Finance (DeFi) economy with billions flowing into the ecosystem and positively affecting the performance of Decentralized Applications (DApps). According to a report by DappRadar, the total volume transactions of DApps in 2020 recorded a 1200% growth with an amount of about $270 billion. Interestingly, 95% of the transaction volume occurred in the Ethereum DeFi economy.
The report estimates that the transaction volume in 2019 was $21 billion, meaning there has been an 1178% increase.
The report also made mention of the monetary inflow from the Bitcoin market to the Ethereum market causing its price to record a yearly high of $646.
It also suggests that the attractive yield in DeFi played the magic in succeeding to get money to flow into the ecosystem. Wrapped Bitcoin (WBTC) and RenBTC were the key influencers of getting the Bitcoin reserve for the DApp economy.
Though it was widely speculated that 2020 was a year for all DApps to record something positive despite the global pandemic, the report reveals that only 10 DeFi DApps did the magic. Just 10 DApps contributed 87% of the total transaction volume of Ethereum. It is worth noting that there were over 1 million active users on the specified 10 DApps. Surprisingly, over 90% representing 930,000 active users were spread across only three of them namely – Uniswap, Compound, and DeFi Swap (crypto.com).
Some Known Limitations for the Ethereum DApps
Despite the boom, the report captured some challenges confronted by the DApp ecosystem in 2020. According to DappRadar, there were high cases of improperly audited or unaudited smart contracts by the DeFi platforms. This was coupled with high cases of hacks of which about $120 million lost in hacking incidents were recorded in 12 different cases.
Also, there was a problem of scalability in the year under review. This caused gas prices to rise higher compared to the previous year. The report also noted that the congestion issues led to the rise of competitors especially in the second half of the year. The likes of Wax, Tron, and Binance Smart Chain were the major names recording a significant share in the total transaction volume.
The report stated that the gambling sector recorded a slightly negative growth with the gaming sector remaining flat. The NFT Marketplaces as said by the report recorded a little growth in 2020. Some of the growth was linked to the emergence of the global pandemic that encouraged their use and recognition as problem-solving platforms.
Prediction made in the coming year was positive as it was said that DeFi will form the foundation of the cryptocurrency economy in 2021 as it plays a very critical role. Also, It was predicted that the Insurance sector would be well recognized in the coming year.