Total value locked (TVL) in decentralized finance (DeFi) applications reached $192 billion in May, the highest amount since February 2022, according to a report from blockchain analytics platform DappRadar. Despite the increase in TVL, the number of unique active wallets (UAWs) using DeFi decreased by 21%.
The US dollar value of cryptocurrencies locked in DeFi applications increased by 17% in May, supported by rising prices of Ethereum (ETH) and tokens. Among all networks, Ethereum dominated the DeFi market TVL, accounting for $130 billion, or 68% of the total. Solana comes in second with $10.9 billion, or 5.7% of the total. Solana’s DeFi TVL increased by 14% from the previous month.
Despite TVL’s strong growth, the DeFi sector has seen a decline in daily UAWs, suggesting that the user base is shrinking at the same time as remaining users deposit more or see the value of their wallets increase. UAW fell 21% to 1.75 million during the month, representing 17% of UAW across all Web3 applications.
DappRadar attributed the increase in TVL to short-term speculation about the possibility of an Ethereum exchange-traded fund. “The DeFi UAW Index fell, meaning most trading was speculative based on the ETH ETF,” the statement said.
According to DefiLlama, 24-hour trading volumes on decentralized exchanges increased from $1.7 billion to $5.1 billion between October 1, 2023 and June 7, 2024. This may have increased returns for liquidity providers and lenders, incentivizing them to deposit more. Cryptography in DeFi applications. This was also a period when Bitcoin (BTC) and Ethereum exchange-traded funds were widely discussed.
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Although the DeFi sector saw a decline in UAW, other segments of the Web3 market gained users, according to the report. The number of active users in the gaming sector reached more than 3 million, an increase of 7.5% from the previous month. The number of non-fungible token (NFT) market users increased by 11%, reaching 1.52 million UAW, and Web3 social media applications reached 1.92 million UAW, an increase of 29%.
The total number of UAW Web3s now reaches 10.4 million, according to the June 6 report. A previous report from April indicated that UAW reached 7 million in the first quarter of 2024, up from 4.3 million users in 2023. Together, this data shows a trend of steadily increasing users of the Web3 application. However, some experts have argued that the integration process remains very difficult and that this will limit the future growth of the sector if not corrected.
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