One other yr within the books. That is the fifth year-end take a look at the highest DeFi memes and charts from us at Dose of DeFi (check out what was in vogue in 2020, 2021, 2022 and 2023 DeFi). Memes and charts are data items of DeFi and crypto; they seize the vibes and market exercise of the years in digestible nuggets.
2024 was a yr the place development and success simply weren’t quick or sufficiently big. We’ve constructed infrastructure, merchandise, grown TVL and even had quantity go up, so the place’s the mainstream influence to silence the haters? It’s already there when you squint in the case of stablecoins, prediction markets, and non-sovereign cash. From right here, it then turns into a query of adoption pace and the emergence of some new model of Moore’s legislation regarding monetary exercise shifting onto blockchains.
DeFi is nearly able to scale to a billion customers. The chain is nearly quick sufficient. Transactions are nearly low cost sufficient. And we nearly have sufficient regulatory readability to onboard institutional and retail buyers. All of it feels tantalizingly shut, as a result of we will see the progress: from the depths of the bear market in 2022, and from the euphoria postDeFi Summer time in 2020. At each factors,this DeFi factor already felt like the long run (to us).
Anyway, with out additional ado, let’s get to the top-five memes and top-five charts of 2024:
Prime-five memes of 2024
What a yr for Bitcoin, beginning in January with Bitcoin ETFs, all through the election and previous $100k. To say ‘Bitcoin has arrived’ is a bit clichéd, however there’s a new stage of mainstream acceptance as a macro asset that doesn’t really feel prefer it’s going away. Bitcoin, within the phrases of Fed Chair Jay Powell, is “identical to gold, solely digital”, which makes it the final word meme coin.
The Bitcoin neighborhood has additionally largely deserted the Bitcoin blockchain, solidifying across the meme of a hard and fast provide of BTC the asset. Final yr and early this yr, there was speak of Bitcoin Season 2, a route for stablecoins and DeFi apps to lastly come to Bitcoin through L2s. Progress to this point has been minimal, and most bitcoiners are as an alternative speaking about BTC the asset in a US Strategic Reserve. Possibly the scare from Google’s Willow quantum computing chip will rekindle curiosity within the underlying blockchain, however it’s arduous to argue with the product-market-fit of Bitcoin – particularly after its stellar 2024 and its seemingly inevitable path in direction of digital gold and non-sovereign cash.
Bitcoin going up is undoubtedly good for the remainder of crypto. Whether or not or not alt season takes off, the general temper in direction of crypto experimentation in TradFi is way brighter when Bitcoin shines. At a person stage, after holding BTC for some time and it going up, the need is to strive extra. And DeFi-enabled merchandise are adjacent-possible for the crypto curious.
Mirror: After twelve years of writing about bitcoin, this is how my considering has modified [JP Koning/Moneyness]
This was additionally the yr that crypto really arrived in American politics, with a particularly profitable 2024 marketing campaign season up and down the poll for crypto candidates. There’s Trump on the high, who has wrapped himself in crypto from NFTs to DeFi forks, and naturally together with his speech in Nashville on the Bitcoin Convention, the place he referred to as for the US to turn into the “crypto capital of the planet”. And because the election, issues proceed to lookup for crypto in Washington. Even this week, with the obvious cancellation of an anti-crypto Democratic SEC commissioner within the lame-duck session.
It’s arduous to explain simply how massive of a turnaround this has been from a yr in the past, and even six months in the past. Again then, the SEC was actively suing Coinbase and sending wells notices to each DeFi venture it may get a US handle for.
As we strategy year-end, Jake Chervinsky of Variant is calling for the crypto trade to rethink their legislative preferences, now that it’s negotiating from a place of power. We’ve been overly optimistic that crypto laws would get executed however Republicans are keen to perform one thing that doesn’t price any cash and a few Democrats can be keen to precise bipartisan bonafides.
What may this imply for DeFi? Take a look at DeFi splits in two for our take or try CoinCenter’s 2025 Prime coverage priorities for 2025.
The success of the ‘Parasitic L2s’ meme demonstrates the facility of the meme. It doesn’t actually matter if it’s true or not, as a result of the message is obvious. In response, the L2s have wrapped themselves within the Ethereum flag, espousing their allegiances. This social layer is an underrated market enforcement mechanism for decentralization on Ethereum, however the larger uncertainty is on the long run Ethereum roadmap. Solana’s success has shaken many in the neighborhood and questioned Ethereum’s dedication to a rollup-centric roadmap. Many declare that L2s are incomes charges that ought to go to ETH holders, whereas the Ethereum L1 is abandoning its core use case (DeFi) to help L2 improvement.
Echoes of this dialog have dominated the discourse for why ETH has trailed BTC and SOL over the past twelve months. L2s are parasitic, whereas the shared state of Solana makes it simple for builders to launch their app with out conducting a market analysis research on which Ethereum L2 to select.
Parasitic L2s have been one in all many critiques hurled at Ethereum this yr from an eclectic class of oldsters who’ve both migrated to Solana (Max) or who straddle a number of communities (Jon Charbonneau of DBA). These critiques have had three results to this point. First they’ve provoked an autoimmune response from some previous Ethereum neighborhood members who’re pushing again with the Ethereum concernoooorrrrs meme. Second, L2s are draping themselves within the flag of Ethereum. And lastly, core devs have “publicly voiced help for scaling the L1” within the final month.
So the memes (and the criticism) work?
Discover extra: Summary away! The race in direction of interoperability [Dose of DeFi]
Throughout a gold rush, promote shovels (so the saying goes). And it definitely rings true for Pump.enjoyable, the primary and main meme coin launch platform, because it has generated $180 million in income since its launch in March. The numbers concerned are an indication of the occasions, with the top-three tokens launched on the platform boasting spectacular market capitalizations: $1.2 billion for Peanut the Squirrel, $800 million for Goatseus Maximus, and $640 million for a 3rd token (whose title we won’t disclose right here).
We see the irony in one of many yr’s high memes being about buying and selling memes. Regardless, this does inform an even bigger story in regards to the rise of Solana, which has been the middle of the memecoin frenzy that has pushed utilization metrics that surpass Ethereum. Solana has arrived in its personal approach in 2024, commanding sufficient of the market that it’s presenting development alternatives for Ethereum DeFi initiatives. For instance, in November, Sky launched its new USDS stablecoin on Solana and one wonders when Aave will comply with (though rewriting a codebase is a bit tougher than minting some tokens). Solana can also be carving its personal path and strategy to MEV that also wants work, however fortunately, Ethereum exile Max Resnick is taking his abilities to Solana to assist. For the time being, Solana’s ecosystem is producing extra MEV. This can be as a result of there’s extra fats, but the sizable alternative finally means extra persons are keen to fireplace up Solana bots to play within the sport, bringing extra liquidity to the system total. Jito has been an enormous success and arguably the second most necessary MEV venture after Flashbots.
Again to the memes and their buying and selling. We aren’t very nihilistic right here at Dose, nor are we judgmental, so we’ll preserve our feedback transient. Crypto financializes all the things. The flexibility to create and distribute a token might be crypto’s greatest unlock; it should simply be utilized in a mess of various methods. However yeah, perhaps don’t purchase or promote memecoins?
Discover MEV on Solana extra with Solana’s fee-market fork within the street from April in Dose of DeFi
Software Particular Sequencing (ASS) is a deliberate provocation. Its creators are utilizing meme warfare to try to manifest into existence an concept round MEV structure. And it’s largely labored? Effectively, for an admittedly small viewers (MEV researchers). Atlas and Sorella Labs are main the meme cost. Each have merchandise constructed round the concept purposes can dictate the financial distribution of its MEV provide chain. This provides them the power to reduce MEV for customers, but in addition decide who can extract and the way.
Constructing ASS purposes is difficult as a result of any try to bypass validators — and thus minimize them out of the worth chain — dangers censorship from those self same validators (or actually, builders). In essence, at this time’s blockchains aren’t censorship-resistant sufficient to totally help ASS architectures inside their current frameworks. That’s why initiatives in search of to manage their sequencing have resorted to launching new chains or L2s, simply as Uniswap did this yr. Nonetheless, new proposals like Braid, Focil, Monad, and SUAVE present promise in making ASS deployments possible. In the meantime, Flashbots continues pushing MEV analysis ahead, championing its personal important meme: TEEs
General, it was a little bit of a down yr for MEV meme-wise, after dominating the dialogue over the previous few years and arguably nonetheless “THE drawback to unravel in crypto”.
A deeper look: Order movement auctions’ bumpy street to credibility
Word: charts are interactive on-line!
Yield is the lifeblood of DeFi. Double digit returns have all the time been the rationale for main inflows. 2023 was a very powerful yr for DeFi yields as a result of common financial institution financial savings charges have been increased than stablecoin DeFi deposit charges. That modified in 2024 because the market roared. This time the double-digit yield was not from random governance tokens, however from somebody on the opposite aspect paying curiosity. We’re seeing billions of {dollars} of borrowing at 15%+ returns all throughout DeFi the final month.
Why? Ethena’s USDe is capturing the yield provided by the premise commerce on centralized exchanges, the place bullish crypto buyers are keen to go lengthy BTC & ETH even with excessive curiosity on their margin loans. This may generate 20%+ APY staking USDe for further bullish occasions, which is why its market cap has exploded to nearly $6bn from nothing a yr in the past. The yield from staking USDe (sUSDe) is lifting charges throughout DeFi because it represents fairly good collateral (backed concurrently by an extended and quick place in ETH or BTC) to borrow in opposition to. So, good buyers have looped their sUSDe to borrow USDC, USDT or one other stablecoin after which buy USDe and stake and repeat. It is smart to maintain looping so long as the borrow price is beneath the yield you may get from staking USDe. In actuality, the one factor stopping extra looping is as a result of the sUSDe provide caps have been hit on Aave, Pendle and elsewhere.
Ethena’s success is among the greatest tales of the yr and one wonders what number of extra eye balls come to DeFi if deposit charges keep double digit for for much longer.
Stablecoins have turn into huge crypto companies. There’s roughly $200b in complete trade market cap backed by primarily greenback property incomes a mean of 4%+ yield. That’s nearly $10b in curiosity that’s being earned by corporations or distributed to DeFi buyers through tokenized yield.
Tether is an amazingly environment friendly firm, with lower than 200 staff and annualized income of $6b+. It’s nearly double its 2022 market excessive in circulating provide. USDC, in the meantime, is rising however now not appears in the identical league as Tether. There may be fairly clear motion away from USDC in direction of Tether after the Silicon Valley Financial institution collapse in March 2023. Sky* has remained related however has not taken off. Its rebrand to Sky & USDS is focused at mass retail however they haven’t gotten there but. USDe from Ethena shouldn’t be actually a stablecoin (artificial greenback is what they like), however its measurement ($6b) and far increased yield alternatives imply its going to be related to the stablecoin dialog no matter what you name it.
Lending has all the time been DeFi’s most fascinating and aggressive market. Belongings borrowed in DeFi have grown from $7.6b a yr in the past to over $22bn. The chart above reveals the market share of the entire quantity borrowed in DeFi (a tougher metric to sport than TVL) with a lot of modifications from a yr in the past.
For starters, Compound and Spark/MakerDAO/Sky noticed their market share decline precipitously. For Sky, this was not such a nasty factor because the lower in complete quantity borrowed displays a transition to RWAs, which have higher margins and are extra constant. Compound, in the meantime, bled property because it continued to endure from a vacuum of management. Morpho now has extra property borrowed than Compound, marking an enormous shift within the lending market in direction of a modular world. Fluid, from DeFi OG InstaDapp, additionally burst onto the scene in 2024. After which there’s Aave, which began the yr with a public cut up with Gauntlet to go together with tussles with Morpho, Ethena and Polygon (okay perhaps it’s simply Marc), however regardless of all of that, property borrowed on Aave has outpaced the remainder of the trade and provides Aave essentially the most lending market share since MakerDAO in 2020. What’s extra, their token worth has additionally been on a tear, main all DeFi tokens with a 300% return in 2024. However will their success proceed or is the expansion of Morpho an indicator that future development can be in modular methods?
As we mentioned, lending is essentially the most fascinating and aggressive DeFi market
The general public mempool shouldn’t be useless but, however there was a constant shift away from it as customers search for MEV safety from personal mempools. Utilizing the general public mempool for a commerce transaction is just worse execution than sending it to a devoted community of solvers who promise to return a lot of the worth they may extract in the event that they traded in opposition to you. We began the yr the place 10% of transactions have been personal and that shifted as much as 30% as a result of Metamask rolled out “Sensible Transactions” to fight “frontrunning”.
MEV has been pushing transaction sequencing outdoors of Ethereum for a number of years and it seems like that’s set to proceed as wallets, customers and purposes turn into extra MEV conscious. Are extra personal transactions unhealthy for Ethereum? It’s unclear however it absolutely modifications the market construction and centralization dangers.
Polymarket was such an enormous story for crypto this yr. Its penetration into the cultural zeitgeist makes it three profitable use-cases for crypto: non-sovereign digital cash, stablecoins and prediction markets. This may make skeptics extra open to different crypto merchandise and in addition be a funnel into different crypto merchandise from Polymarket customers.
The Election put Polymarket on the map, however will it have endurance the 4 years in between elections? The chart above is encouraging, displaying Polymarket with over $1bn in non-election bets in December to this point, double what it noticed in August & September.
That’s it! Suggestions appreciated. Simply hit reply. I loved scripting this as a mirrored image on the yr. Hope everybody has a stunning vacation season.
Dose of DeFi is written by Chris Powers, with assist from Denis Suslov and Monetary Content material Lab. *I spend most of my time contributing to Powerhouse, an ecosystem actor for MakerDAO/Sky. A few of my compensation comes from MKR, so I’m financially incentivized for its success. All content material is for informational functions and isn’t supposed as funding recommendation.
