At Only 1.5%, DeFi Is Full Of “ETH Killers” And Dead Projects — But Could Do Better
According to Ryan Watkins, a researcher at crypto research firm Messari, the DeFi market is still “extremely small in perspective” despite having upped its game in the last couple of months, especially after the crypto market collapse.
On his Twitter thread, he explained the low impact of DeFi by comparing it to other assets. Even with top DeFi projects like Compound, Maker, Synthetix, Aave, and Kyber Network, the DeFi market Cap at 4.1 Billion is less than that of XRP at 6.6 Billion and BCH at 4.4 Billion.
“The entirety of what we call DeFi is worth less than both XRP and Bitcoin Cash alone. Despite its rerating over the past couple months, DeFi is still extremely small in perspective.”
DeFi Is Full Of Distractions and Dead Projects
Out of the 4.1 Billion, about half of DeFi projects worth 2.1 billion are only taking capital from Ethereum while others are ghost town projects.
Here, he inferred the top 10 most popular altcoins, including XRP, Bitcoin Cash, Cardano, Bitcoin SV, Litecoin, Binance coin, EOS, Tezos, Stellar and Monero.
“The top 30 crypto assets outside of BTC and ETH are full of useless first-gen cryptocurrencies, ghost town “ETH Killers” and dead Projects. This doesn’t even include the vaporware yet to launch projects that raised large sums of money at ridiculous valuations in 2017.”
Watkins said that outside of BTC and ETH, DeFi still performs poorly in relation to other publicly traded Layer 1s which are valued at $45 billion.
“DeFi’s relative stature becomes even starker when comparing it to all publicly traded layer 1s outside of Bitcoin and Ethereum. DeFi is worth an order of magnitude less than these projects, which are collectively worth $45 billion.”
The current insignificance of the DeFi market, as Watkins puts it, is made worse by the fact that Dogecoin, a meme coin at $510 million, still outperforms top DeFi assets like Compound, Aave and Synthetix.
“Even Dogecoin, a literal meme coin is worth more than nearly every asset in DeFi.”
There’s A Brighter Future for DeFi
Watkins added that one of the reasons that DeFi is underperforming is because the traditional market is yet to recognize the main crypto assets as stores of values in the crypto market.
“So far the market has yet to credit crypto’s capital assets like they have non-sovereign stores of values.”
By doing so, Watkins thinks assets like Bitcoin and ETH would have roles similar to gold and silver in the precious metals market.
“It is an imperfect analogy, but the relative size of capital assets to non-sovereign SoVs in the fiat economy suggest this imbalance may correct over time.”
This would open up the crypto market to more investments and boost more crypto capital inflow to many DeFi projects. As Watkins concluded:
“DeFi doesn’t need new money flowing into crypto to continue its rise. All it needs is a reallocation of capital.”