DeFi growth is helping to increase crypto’s share of the global money supply to over 2%


This year, decentralized finance (DeFi) has proven to be a transformative sector for the cryptocurrency ecosystem and is also causing a stir in global financial markets as institutional investors have the potential to generate high returns on stable coins, altcoins and bitcoin.

While Dogecoin (DOGE) price movement has ruled the headlines for the past few weeks, Delphi Digital has recorded the growth of the DeFi ecosystem on the Ethereum (ETH) network, which has been steadily gaining strength over the past month.

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Ethereum DeFi performance since the beginning of the year. Source: Delphi Digital

According to Delphi Digital researchers, protocols have started in major ecosystems such as Ethereum, BSC, Solana (SOL), Avalanche (AVAX), Polygon (MATIC) and Terra (LUNA), while most of the growth has started on Ethereum-based DeFi platforms gained traction and now make 34% of the total value locked in DeFi.

Multi-chain DeFi total blocked. Source: Delphi Digital

The BSC ecosystem is the second fastest growing DeFi ecosystem after Ethereum, thanks in part to its connection with the Binance ecosystem, which has immense resources to enable its native protocols to get off to a good start.

Venus (XVS), PancakeSwap (CAKE), and PancakeBunny (BUNNY) are the three main DeFi protocols in the BSC, and the total value blocked on the network is $ 49.1 billion.

Total value locked in DeFi on the BSC. Source: Defistation

Overall, all Layer 1 ecosystems have now exceeded a cumulative total value of 130 billion US dollars (TVL).

Stable coins form the foundation

According to Delphi Digital, native DeFi stablecoins have played an important role in growing the ecosystem and now account for nearly $ 10 billion of total market cap.

Dai’s (DAI) circulating supply recently surpassed the $ 4 billion mark to establish itself as the largest DeFi stablecoin, while UST is a rapidly growing challenger to the Terra ecosystem.

DeFi Stablecoin market caps. Source: Delphi Digital

From a broader market perspective, the growing circulating supply of the top stablecoins projects (USDT and USDC) has further helped add value to the entire crypto sector by easily adding new funds to the market.

To highlight the importance of growth in the cryptocurrency ecosystem, Delphi Digital refers to the global M2 money supply, which is the broadest definition of money supply.

Percentage of cryptocurrency of total global money supply. Source: Delphi Digital

With gains made across the cryptocurrency ecosystem since mid-2020, the cumulative market capitalization of the crypto market is now more than 2% of the world’s M2 money supply, with Bitcoin (BTC) alone accounting for 1%. Overall, the rest of the crypto market accounts for around 1.2% of the world’s money supply.

With signs of increased adoption of cryptocurrencies appearing almost daily, such as the May 6 revelation that Goldman Sachs set up a crypto trading desk, it is likely that the amount of funds locked in DeFi is next to crypto’s share of the global Money will continue to rise will deliver.

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