October 25, 2019 at 8:21 am UTC · 2 min read
“Total ETH locked in DeFi (currently 2.311M) is approaching its all-time high of 2.332M, levels last seen in mid-April 2019. At the moment, ~2.13% of all ETH is locked in DeFi.”
DeFi in Ethereum refers to the usage of ETH to process financial services that often require third-party service providers, such as lending.
Through the usage of smart contracts, DeFi allows users to borrow and lend money in a peer-to-peer manner with ETH as collateral, maintaining a decentralized financial ecosystem.
DeFi reflects Ethereum growth, but more data is needed
Investors like Ryan Sean Adams, founder at Mythos Capital, said that public blockchain data shows a significant amount of Ethereum issuance is being consumed by DeFi, which suggests that the demand for DeFi is increasing at a rapid rate.
Since Ethereum is used as collateral in most DeFi-related services, the growth of the DeFi market directly reflects the total usage of ETH, leading to an overall increase in user activity.
“Is more ETH getting locked in money protocols than being issued? Current ETH issuance: 4.6% annual. Since Jan 2018, ETH supply grew 12.15% ETH. locked in DeFi currently consumes half that amount. DeFi demand is sucking up new ETH issuance.”
Adams followed up that:
“Is DAI used in money protocols? Yes. Increasingly so. Over 22m DAI now locked in money protocols.