The cryptocurrency market experienced a sharp price increase at the end of the first quarter of 2020. And all of the key DeFi Ethereum (ETH) DApps experienced strong growth in daily activity in single wallets during this period, as shown by DappRader.
The explosion in prices in the crypto space has, in turn, had a positive impact on decentralized applications (DApp) offering margin exchanges. It is relevant to note here that the coronavirus pandemic has caused global economic uncertainty. And this has generally affected daily activities to a large extent. As a result, several key DApps have considered revising their main functionality.
Although the dollar value of ETH fell sharply by 44% on March 12, this extended to its use of DApp which had a healthy peak. The fact that each Ethereum DeFi DApp has its own audience and use is probably a contributing factor.
Jon Jordan, director of communications for DappRadar, spoke at length in his report on the state of the DeFi DApps in a YouTube video.
MakerDAO is without doubt one of the biggest DeFi DApps using the ETH protocol. It experienced a recovery after activating a multi-collateralization feature in November of last year. This feature allows users to generate savings and exchange tokens. It propelled MakerDAO to the position of a full-fledged DeFi application. Until February, more than 4,000 new unique portfolios have interacted with its smart contracts.
Now, as DApp, MakerDAO has the functionality to set up savings accounts for DAI and strike stable and decentralized currency. However, its monthly retention rate is relatively low, at only 9% on average. This is important because it indicates that many users, after making or locking DAI in savings, do not use it as intended. While a majority of them have not repaid the loan, many would simply close their savings accounts next month.
Last month, we covered the concerns encountered by MakerDAO and the parameter adjustments it made to address them.
Synthetix started as a Havven Stablecoin project on the way to becoming a DeFi DApp leader. It allows its users to earn part of its trading costs in the form of its token, SNX. Synthetix has increased its monthly audience since its launch and also boasts of better daily business activity than MakerDAO, particularly in terms of retention characteristics. The fall in the price of SNX in March 2020 somewhat dampened the application, but the loss of confidence should be short-lived.
It fell in March 2020, which is attributed to the drop in the price of the SNX token. This drop implies a loss of confidence which must be rebuilt as soon as possible.
The relaunch of MakerDAO last November had triggered a drop in Compound, the two operating with the same capacity. However, its monthly retention rate is higher than MakerDAO. While many DeFi DApps are revising their business model with a possible overhaul, Compound hopes to ride its recent upward trend in the coming months.
Previously, we had named Compound as one of the popular blockchain-based lending and borrowing platforms running on Ethereum.
Other ETH-based DeFi DApps that registered interest in the first quarter of the year include dYdX and Fulcrum, as reported by DappRadar in his blog.
DeFi DApp ecosystem
However, understanding their performance goes beyond an isolated analysis of DeFi DApps. It is also important to consider that they can all interact in their ecosystem. By the way, MakerDAO is still the most popular among all these DApps and attracts a large number of users to the DeFi space.
In addition, the first quarter of 2020 followed the trend of last year and experienced steady growth in public interest in the Ethereum DeFi ecosystem. And as experts seem to believe, the recent drop in crypto prices, while testing DApps on many fronts, would lead to greater product resilience. Indeed, this could lead to a continuation of the dynamic despite the coronavirus crisis and its effects on the world economy.