Following the previous “Insights from Delphi Digital’s Annual Blockchain Gaming Report,” cryptocurrency researcher Stacy Muur has compiled 20 key insights from Delphi Digital’s Annual DeFi Report.
Table of Contents:
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Liquidity Staking
Decentralized Exchanges
Application-Specific Rollups
RWA
Interest-rate derivatives (IRD)
Decentralized Stablecoins
Wallets
On-chain Gambling
#1: Currently, the staking rate of ETH is about 23.7%, relative to the total supply of 120.2 million ETH. The amount of staked ETH is approaching the target value of 33.5 million ETH (approximately 27% of the total ETH supply), which is considered the optimal level required to ensure network security and robustness.
#2: The adoption of LSD has also seen significant growth, with approximately 44% of all staked ETH currently existing in these protocols. The unique utility provided by Lido Finance’s stETH gives it a significant competitive advantage over other LSDs.
Highlights in the 2023 Liquidity Staking Token (LST) space:
Frax Finance has shown steady growth, with its ETH staking volume increasing from 38K to 233K in 2023. Frax stands out for its innovative sfrxETH design and integration within its ecosystem, especially in Fraxlend. Mantle has introduced the mETH product using its protocol’s native ETH to generate revenue and enhance liquidity on decentralized exchanges (DEXs). Ether fi and Renzo Protocol have both integrated native re-collateralization solutions on EigenLayer.
#3: The LSD (Liquidity Staking Derivatives) industry on Ethereum has matured, becoming competitive and saturated.
#4: Due to the diminishing competitiveness of these incentive-driven high-yield rates, many LSDfi projects are starting to lose market appeal.
#5: Re-collateralization (Eigenlayer) will be the most significant development in the staking track in 2024.
#6: Uniswap v4, Uniswap X, and other “purpose-driven” DEXs are becoming the focal points of 2024. Some noteworthy projects include: Rage Trade, IntentX, aori, Uniswap, CoW Swap, 1inch, SYMMIO.
#7: Sustainable contract DEXs have experienced a year of development, but market share has not seen growth. Interestingly, each DEX is exploring different ecosystems. dYdX v4 is turning towards the Cosmos application chain, Aevo OP Stack is a pioneer, Vertex is elevating the user experience of decentralized exchanges to new heights, and Rabbitx is becoming a booster for Starkware.
#8: Aevo has paved the way for Rollapps (forked from Optimism and deployed their DEX on it to expand its supportable usage). Most DEXs, especially derivative exchanges, will benefit from having their own execution environment.
#9: Noteworthy are:
Aevo
Lyra Finance (less centralized matching process compared to Aevo and Vertex);
Caldera, Conduit, and other tools simplifying rollup deployment;
Astria, Espresso Systems (shared sequencers).
#10: Real-world assets were one of the most successful areas in cryptocurrency in 2023. Worth watching in 2024: Backed, Superstate.
#11: Currently, Pendle Fi, Notional Finance (fixed-rate borrowing and lending), and ipor.io are a few sustainable Interest-Rate Derivatives (IRD) protocols. In the coming years, interest-rate derivatives may become one of the more compelling narratives in the cryptocurrency space.
#12: Decentralized stablecoins only hold a small fraction of the overall stablecoin market share.
#13: The derivatives market is becoming a key area where the full potential of decentralized stablecoins has yet to be fully developed, such as Synthetix’s sUSD.
#14: For most wallet developers, user experience and in-wallet experience are top priorities.
#15: Noteworthy are:
MetaMask (market leader)
Phantom (features excellent functions like transaction simulation)
Rabby (arguably the best EVM wallet)
Brahma Fi (institution-centered smart wallet)
#16: Decentralized sports betting platforms still have some work to do in attracting users and bettors to be ready for the golden age.
#17: Nevertheless, decentralized sports betting platforms have performed fairly well in terms of market share, accounting for about 20% of Rollbit.
#18: Telegram bots like Unibot, BookieBet, and Boxbet provide temporary mobile service experiences and have reached peak daily trading volumes of 35% for Azuro, stabilizing around 15% thereafter.
#19: Thales has a first-mover advantage due to deployments on Optimism, Arbitrum, and Base.
#20: Azuro Protocol has been deployed on Polygon and Gnosis chains, overcoming initial slow starts to surpass Thales recently as the decentralized sports betting platform with the highest trading volume.
