After the previous “Insights into Delphi Digital’s Annual Chain Game Report,” cryptocurrency researcher Stacy Muur has also compiled 20 important insights from Delphi Digital’s Annual DeFi Report.
Table of Contents:
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Liquidity Staking
Decentralized exchanges
Application-specific rollups (Rollapps)
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 ETH staked is approaching the target of 33.5 million ETH (about 27% of the total ETH supply), which is considered the optimal level to ensure network security and robustness.
#2: The adoption of LSD has also seen significant growth, with approximately 44% of all staked ETH existing in these protocols. Lido Finance’s stETH offers unique utility, giving it a significant competitive advantage compared to other LSDs.
Highlights in the field of Liquidity Staking Tokens (LST) in 2023:
Frax Finance has shown steady growth, with its ETH staking volume increasing from 38K to 233K in 2023. Frax stands out due to its innovative sfrxETH design and integration within its ecosystem, especially in Fraxlend.
Mantle has launched its mETH product utilizing its protocol’s own ETH. The purpose of mETH is to generate revenue for Mantle 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 highly competitive and saturated.
#4: Many LSDfi projects have started losing market attractiveness as the incentive-based high yields are no longer competitive.
#5: Re-collateralization (Eigenlayer) will be the most important development in the staking track in 2024.
#6: Uniswap v4, Uniswap X, and other “purpose-driven” DEXs are becoming the focus in 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 haven’t seen market share growth. Interestingly, each DEX is exploring different ecosystems. dYdX v4 is pivoting towards the Cosmos application chain, Aevo OP Stack pioneers, Vertex elevates user experience on decentralized exchanges, and Rabbitx becomes a booster for Starkware.
#8: Aevo has paved the way for Rollapps (it forks Optimism and deploys their DEX on top to expand its supported usage). Most DEXs, particularly derivatives exchanges, will benefit from having their own execution environments.
#9: Worth mentioning are:
Aevo
Lyra Finance (less centralized matching process compared to Aevo and Vertex);
Caldera, Conduit, and other simplified tools for rollup deployment;
Astria, Espresso Systems (shared sequencers).
#10: Real-world assets have been one of the most successful areas in cryptocurrency in 2023.
Worth watching in 2024:
Backed
Superstate
#11: Currently, Pendle Fi, Notional Finance (fixed-rate lending), and ipor.io are a few sustainable interest-rate derivatives (IRD) protocols. In the coming years, interest-rate derivatives may become a more prominent narrative in the cryptocurrency space.
#12: Decentralized stablecoins only represent a small portion of the overall stablecoin market share.
#13: The derivatives market is becoming a key area for the yet-to-be-fully-developed potential of decentralized stablecoins, such as Synthetix’s sUSD.
#14: User experience and in-wallet experience are top priorities for most wallet developers.
#15: Worth mentioning are:
MetaMask (market leader)
Phantom (excellent features like transaction simulation)
Rabby (arguably the best EVM wallet)
Brahma Fi (institution-centric smart wallet)
#16: Decentralized sports gambling platforms still need some work to be ready for their golden age in attracting users and bettors.
#17: Nevertheless, decentralized sports gambling platforms have performed quite 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 trading volumes of 35% for Azuro. It has since stabilized at around 15%.
#19: Thales has an advantage as a pioneer due to its deployment on Optimism, Arbitrum, and Base.
#20: Azuro Protocol, despite a slow start, has deployed on Polygon and Gnosis chains and has surpassed Thales as the highest trading volume decentralized sports gambling platform.
