• DeFi users have increased by 31% quarter on quarter in 2022, despite the 525% spike seen in 2021.
• Total estimated number of DeFi users is expected to surpass 5.5 million in Q4, 2022.
• Projects have used the crypto winter to build and improve their products, attracting more users.
Overview of DeFi Growth
DeFi or decentralized finance continues to attract more users with strong products and services across segments such as decentralised exchanges (DEXs), lending protocols, staking and yield platforms. Despite a year-long crypto winter, user numbers grew by 31% quarter on quarter in 2022 compared with the 525% spike seen in 2021. The current estimates for total DeFi wallets suggest that it will surpass 5.5 million in Q4 2022.
User Numbers Skyrocketed
In 2021, user numbers skyrocketed 545%, thanks to cryptocurrencies booming during a staggering bull run. However, market prices show that most assets in the space have plummeted in value and the DeFi index has shrunk by 76%, compared with a 65% decline for Ethereum. Despite this downturn, projects have used the crypto winter to build and improve their products which has attracted more users across segments like DEXs and CDPs (collateralized debt positions).
Total Value Locked Shrank
The total value locked (TVL) shrank significantly below $40 billion as per DefiLlama reports but this was not enough to tell the whole story of decentralised finance’s performance over the past one year. Overall, wallets surpassed 5 million mark during Q3 2022 while it is estimated that this number will exceed 5.5 million marks by end of Q4 2022 with an 8% growth projection during that period as well.
DeFi Eating Into Traditional Finance
The trend reflects what analysts at HashKey Capital call a “blue ocean market” where innovative services are capturing demand which is adding to user growth steadily for decentralized finance sector. This suggests that Decentralized Finance is not only eating into traditional finance or TradFI market but also creating its own new market too which means that there is still potential for further growth within it even after such turbulent times for cryptos overall .
Overall it can be said that even though there has been significant shrinkage of TVL and other metrics related to DeFi sector over past year , projects have managed to use this time constructively causing further increase in user numbers . These figures along with blue ocean markets indicate potential for continued future development of decentralized finance sectors .