One other 12 months 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 info models of DeFi and crypto; they seize the vibes and market exercise of the years in digestible nuggets.
2024 was a 12 months 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 impression to silence the haters? It’s already there in the event you squint in terms of stablecoins, prediction markets, and non-sovereign cash. From right here, it then turns into a query of adoption velocity and the emergence of some new model of Moore’s regulation regarding monetary exercise transferring 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 longer term (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 12 months 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 degree 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 last word meme coin.
The Bitcoin neighborhood has additionally largely deserted the Bitcoin blockchain, solidifying across the meme of a set provide of BTC the asset. Final 12 months and early this 12 months, 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. Perhaps the scare from Google’s Willow quantum computing chip will rekindle curiosity within the underlying blockchain, however it’s onerous to argue with the product-market-fit of Bitcoin – particularly after its stellar 2024 and its seemingly inevitable path in the 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 the direction of crypto experimentation in TradFi is far brighter when Bitcoin shines. At a person degree, after holding BTC for some time and it going up, the will is to attempt extra. And DeFi-enabled merchandise are adjacent-possible for the crypto curious.
Mirror: After twelve years of writing about bitcoin, here is how my considering has modified [JP Koning/Moneyness]
This was additionally the 12 months that crypto actually 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 known as for the US to turn out to be the “crypto capital of the planet”. And for the reason that 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 onerous to explain simply how large of a turnaround this has been from a 12 months 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 challenge it might get a US handle for.
As we method 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 will likely be keen to precise bipartisan bonafides.
What might this imply for DeFi? Take a look at DeFi splits in two for our take or take a look at CoinCenter’s 2025 Prime coverage priorities for 2025.
The success of the ‘Parasitic L2s’ meme demonstrates the ability of the meme. It doesn’t actually matter if it’s true or not, as a result of the message is evident. 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 greater uncertainty is on the longer term 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 straightforward for builders to launch their app with out conducting a market analysis examine on which Ethereum L2 to select.
Parasitic L2s had been one in all many critiques hurled at Ethereum this 12 months 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 outdated 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 the direction of interoperability [Dose of DeFi]
Throughout a gold rush, promote shovels (so the saying goes). And it actually 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 instances, 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 identify we won’t disclose right here).
We see the irony in one of many 12 months’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 means 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 more durable than minting some tokens). Solana can be carving its personal path and method to MEV that also wants work, however fortunately, Ethereum exile Max Resnick is taking his abilities to Solana to assist. In the meanwhile, Solana’s ecosystem is producing extra MEV. This can be as a result of there’s extra fats, but the sizable alternative in the end means extra individuals are keen to fireside up Solana bots to play within the recreation, bringing extra liquidity to the system total. Jito has been an enormous success and arguably the second most necessary MEV challenge 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 hold our feedback transient. Crypto financializes the whole lot. The power to create and distribute a token might be crypto’s largest unlock; it would 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 attempt to manifest into existence an concept round MEV structure. And it’s largely labored? Nicely, for an admittedly small viewers (MEV researchers). Atlas and Sorella Labs are main the meme cost. Each have merchandise constructed round the concept that purposes can dictate the financial distribution of its MEV provide chain. This offers them the flexibility 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 reduce them out of the worth chain — dangers censorship from those self same validators (or actually, builders). In essence, right this moment’s blockchains aren’t censorship-resistant sufficient to completely help ASS architectures inside their present frameworks. That’s why initiatives looking for to manage their sequencing have resorted to launching new chains or L2s, simply as Uniswap did this 12 months. 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 very important meme: TEEs
General, it was a little bit of a down 12 months for MEV meme-wise, after dominating the dialogue over the previous few years and arguably nonetheless “THE downside to unravel in crypto”.
A deeper look: Order stream auctions’ bumpy street to credibility
Notice: 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 robust 12 months for DeFi yields as a result of common financial institution financial savings charges had been greater 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 supplied by the idea 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 instances, which is why its market cap has exploded to nearly $6bn from nothing a 12 months 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 sensible to maintain looping so long as the borrow fee is beneath the yield you will 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 without doubt one of the largest tales of the 12 months 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 out to be large crypto companies. There’s roughly $200b in whole trade market cap backed by primarily greenback belongings incomes a median of 4%+ yield. That’s nearly $10b in curiosity that’s being earned by firms 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 not appears in the identical league as Tether. There’s fairly clear motion away from USDC in the 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 is just not actually a stablecoin (artificial greenback is what they like), however its dimension ($6b) and far greater 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. Property borrowed in DeFi have grown from $7.6b a 12 months in the past to over $22bn. The chart above exhibits the market share of the overall quantity borrowed in DeFi (a more durable metric to recreation than TVL) with numerous modifications from a 12 months 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 whole quantity borrowed displays a transition to RWAs, which have higher margins and are extra constant. Compound, in the meantime, bled belongings because it continued to endure from a vacuum of management. Morpho now has extra belongings borrowed than Compound, marking an enormous shift within the lending market in the 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 12 months with a public break 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, belongings borrowed on Aave has outpaced the remainder of the trade and provides Aave probably 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 will likely be in modular techniques?
As we stated, lending is probably the most fascinating and aggressive DeFi market
The general public mempool is just not lifeless 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 solely worse execution than sending it to a devoted community of solvers who promise to return a lot of the worth they might extract in the event that they traded in opposition to you. We began the 12 months the place 10% of transactions had 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 appears to be like like that’s set to proceed as wallets, customers and purposes turn out to be extra MEV conscious. Are extra personal transactions unhealthy for Ethereum? It’s unclear however it certainly modifications the market construction and centralization dangers.
Polymarket was such an enormous story for crypto this 12 months. 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 likewise 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 penning this as a mirrored image on the 12 months. 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 meant as funding recommendation.
