- Major players such as Uniswap and Lido attracted users.
- Some of the DeFi ecosystem’s other performance indicators fell short of expectations.
After taking losses during the 2022 bear market, the decentralized finance (DeFi) ecosystem has bounced back incredibly in 2023.
According to on-chain analytics company Dune, there were 778,000 users across various DeFi platforms in May, a figure last seen at the peak of the bull market phase in 2021.
A closer look at the chart shows that the number of users increased for three consecutive months in 2023, before falling slightly in April. However, the month of May more than made up for this with a growth of 35%.
According to analysis by 🧙♂️ @richardchen39saw 778,000 unique DeFi users in May
That’s more than any month since December 2021
— Dune (@DuneAnalytics) May 31, 2023
Not everything was hunky-dory
Despite the impressive user base expansion, some of the other key performing indicators (KPIs) of the DeFi landscape have fallen short of expectations. The Total Value Locked (TVL), the defining characteristic of DeFi growth and demand, fell further in May with no signs of recovery, according to DeFiLlama.
At the time of publication, assets worth $52.27 billion had been deposited into smart contracts of various protocols. This represents a decrease of 19% from the annual peak reached in mid-April.
Source: DeFiLlama
In addition, trading volumes on decentralized exchanges (DEXs) fell further. In May, trades totaling $72.4 billion were settled on non-custodial exchanges, a 2% monthly drop and almost half the record volume seen in March following the USD currency [USDC] disconnection crisis.
Source: DeFiLlama
DeFi giants continue to attract users
It was clear that while more users were turning to DeFi protocols, most of them were making low value transactions. Memecoin trading could be a plausible reason to explain this story.
The world’s largest DEX by Uniswap trading volume [UNI] saw transactions worth more than $33 billion executed in May, according to DeFiLlama. Additionally facts showed that the number of users on the DeFi giant increased dramatically in the first week of the month.
In addition, Lido Finance [LDO]the largest liquid staking protocol, also recorded a surge in user numbers, mainly driven by the launch of the V2 version that enabled Ethereum [ETH] recordings. In this way, it contributed to the increasing number of users in the DeFi ecosystem.
Source: DeFiLlama
Read Uniswaps [UNI] Price Forecast 2023-24
The bottom line is that DeFi has proven to be at the forefront of the financial revolution in the new decade.
From just over 80,000 total users in 2020, the ecosystem has expanded exponentially. It now houses more than 7.5 million at time of publication, data from Dune revealed.
Source: Dune