- Top DeFi and GameFi tokens correlated with ETH on most occasions, but the altcoin king continues to outperform them.
- Interest in DeFi tokens has not rekindled.
The Decentralized Finance (DeFi) and Gaming Finance (GameFi) sectors that operate on the Ethereum [ETH] blockchain is growing in popularity, according to Glassnode. However, the same data showed that the growth of these sectors has not matched the hype. The same was true for tokens associated with the projects.
The emerging #Ethereum The DeFi, GameFi, and Staking sectors are gaining momentum, contributing to the value growth of both the sectors themselves and Ethereum as a whole.
Nevertheless, their current representation within the broader Ethereum ecosystem remains relatively modest…. pic.twitter.com/QqAFduW3pp
— glassnode (@glassnode) June 3, 2023
As the leading smart contract platform, Ethereum provides the infrastructure and ecosystem for these innovative applications to thrive.
While Ethereum faced challenges like high gas fees and scalability issues, contributions from projects in the above sectors have been relatively sparse. As expected, the DeFi sector accounted for the largest share at 3.04%.
Despite Lido Finance [LDO] growth in adoption, the liquid strike protocol aspect took a slight share of 1.6%. The GameFi sector, supported by Polygon [MATIC] steps picked up 1.2%.
The blue chips are no match for ETH
On May 31, the on-chain analytics platform analysed The correlation of ETH with the projects using the DeFI blue-chip index. The blue-chip index tracks the real-time market performance of the largest DeFi projects.
According to the report, the movement of ETH alongside tokens among the group was similar. However, there have been times when the correlation has been decoupled.
For example, when ETH hit its All-Time High (ATH) in 2021, the tokens’ overall price performance fell by 43%.
Source: Glassnode
Despite the similarities in trend, ETH continued to outperform tokens. In support of this claim, Glassnode stated:
“In the wake of the 2022 bear market, DeFi tokens are down -92.1% below May 2021 ATH, while ETH is down just 45%”
Moreover, it appeared that investors had not talked FTX collapse aftermath. During that period, there were several talks about the full adoption of DeFi projects.
However, that has not been the case. According to Glassnode, Ethereum Mainnet trading volume still surpassed all DEXs associated with the sector.
All talk, no action
In fact, centralized exchanges, including OKX and Binance, had much more liquidity than DEXs Uniswap [UNI] and swimming pools like Crooked Finance [CRV].
Rather than resulting in increased demand, the creation of new addresses was unimpressive. An increase in new addresses suggests the attraction of new investors.
However, when the metric falls to a daily growth of 600, as with DeFi blue chips, it means adoption momentum has slowed.
Source: Glassnode
Realistic or not, here it is MATIC’s market cap in ETH terms
In addition, the majority of DeFi tokens mostly functioned under their individual ecosystem. UNI, which has a wide range of uses, was the standout token. This was because it operates outside its home base.
In summary, ETH plays a huge role in the growth or decline of these tokens. But with new models coming up as a result of new proposals on Uniswap and MakerDAO [MKR]a resurgence of interest would be difficult to achieve.