
Recent quarterly findings have shone a spotlight squarely on the developing decentralized finance (DeFi) market and the rapidly evolving landscape of Web3 gaming within the crypto industry. The comprehensive first-quarter report of 2024 from QuickNode showcases how these two sectors eclipsed the previously dominant stablecoin category in key performance indicators, providing a clear snapshot of evolving investor penchant and market zeitgeist during this timeframe.
The rejuvenation of DeFi has been substantial throughout the first quarter of the year. Echoing this resurgence, developers and users have exhibited increased activity across platforms, including prominent chains such as Solana (SOL) and Base. This flourishing return of interest breathes new life into the hope of another ‘DeFi Summer.’ Indeed, DeFi initiatives have begun to increasingly adopt newer paradigms such as staking, liquid staking, restaking, and liquid restaking, acting as transformative forces for its expansion. As evidence, staking now comprises a noteworthy fraction of DeFi’s Total Value Locked (TVL).
Although stablecoins persist at the forefront of address activity, DeFi has marked a major milestone by overtaking stablecoins on the vital parameter of transaction counts. The number of DeFi’s transactions swelled, reaching an impressive average of nearly seven million daily transactions throughout the initial quarter of the year, in addition to leading the race in fees spent, gas usage, and the sheer volume of projects. And all this feat was achieved even as DeFi constitutes a mere ≈4% of the total crypto market cap.
The first quarter of ’24 saw a steady increase in the TVL for yield-generating protocols within DeFi, leaping from $26.5 billion in Q3 ’23 up to $59.7 billion in Q1 ’24. As interpreted by QuickNode, this rally signals a revival of trust and liquidity within DeFi markets as investors scout for lucrative yield-generating opportunities.
In coordination with DeFi’s advances, Web3 gaming has surfaced as a meaningful divergence from traditional gaming platforms. By employing cryptocurrencies and non-fungible tokens (NFTs), Web3 gaming enables players to explore a decentralized gaming arena. With increasing power to impact games and reap rewards, players are shifting the balance away from the grasp of centralized authorities in gaming.
The implications of this shift are felt in the growth of Web3 gaming, which has outstripped stablecoins in transaction volume and achieved an admirable 155% growth in active addresses across all categories in just the first quarter of ’24. A whopping 370% year-over-year increase in transactions within Web3 gaming attests to the leap in player immersion and involvement.
Meanwhile, stablecoins remain attractive, maintaining a lead in daily active users by embodying more than 41% of all Web3 user activity. However, other domains have posted stronger growth on a quarter-over-quarter basis, hinting at possible gains in their relative positions. Tether’s USDT continues to reign supreme as the preeminent stablecoin, holding approximately 75% of the market cap. Nevertheless, Circle’s USDC has surged ahead in volume and average transaction size, largely owing to Coinbase’s efforts to incorporate USDC on its platform and advocate for its utilization on the Layer 2 network, Base.
The surge in stablecoin user activity in Q1 ’24 can be ascribed to several factors, including the endorsement and listing of spot Bitcoin ETFs in the US, the forecast of Bitcoin’s subsequent Halving event, the depreciation of fiat currencies, the rising popularity of low-volatility assets, and the enduring strength of the USD, to which over 90% of stablecoin transactions are pegged. As the total crypto market cap stands at a robust valuation of $2.1 trillion, it is apparent that both new and seasoned users are leaping at the stability and value predictability offered by stablecoins during times of market volatility.