A report by Dapp.com reveals Ethereum had more than 1.4 million active decentralised application (dApp) users last year, up from just over 800,000 in 2018. Of these, 1.28 million were new users and 137,000 were returning users.
The research also shows that of the 1,445 new dApps that were launched on the six largest smart contract platforms in 2019, a substantial 690 were Ethereum based.
Finance sector takes charge
Just over a quarter (26%) of active users were from finance – just ahead of exchange (23%). Likewise, 40% of the total $2.3 billion volume came from finance, 29% from exchange, and 18% from gambling.
At the same time, however, nearly half of active Ethereum dApp users used DeFi dApps last year, and 70% of the volume generated by the native ETH token was the use of decentralised exchanges and financial services, such as lending.
The rise of DeFi
DeFi refers to the transformation of old financial products into trustless and transparent protocols that run without intermediaries and outside of the control of companies and governments.
ConsenSys noted in a recent blog that Ether has become the “go-to collateral asset” for DeFi platforms and applications, adding: “Ethereum has established itself as the protocol that will become the foundation for the new financial economy.”
Other competing blockchains are also building DeFi products, but at a much slower pace than Ethereum. The number of active projects – with more than 50 daily users – nearly doubled in 2019 according to a report by Binance, and a growing pool of developers has been building new products and establishing new services.
Some of the main players in the DeFi space include Compound, which lets people borrow and lend coins such as ETH, USD Coin, and MakerDAO’s DAI stablecoin; Uniswap, which is designed to facilitate automatic digital asset exchange between ETH and ERC-20 tokens; and Augur, a decentralised prediction network.
In 2020, it is expected that new and existing companies will develop on top of borrowing and lending protocols that will enhance efficiency and build new products.
Some of these have already been created, such as Idle and Staked’s robo-advisor for yield generation.
“While 2019 saw significant strides forward in the development of decentralised finance, 2020 looks set to make a leap,” ConsenSys’ report claims.
Some people believe a billion-dollar DeFi market could be just around the corner and that huge opportunities exist in places that have restrictive banking practices.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.