- DeFi TVL reaches $192 billion, the highest since February 2022.
- Active DeFi wallets decline by 21%, indicating a shrinking user base.
- Ethereum dominates DeFi market, holding 68% of the total TVL.
The total value locked (TVL) in decentralized finance (DeFi) applications surged to $192 billion in May, the highest amount since February 2022, according to a report by blockchain analytics platform DappRadar. Despite the rise in TVL, the number of unique active wallets (UAW) using DeFi applications declined by 21%. In May, the U.S. dollar value of cryptocurrencies locked within DeFi applications grew by 17%, driven by increasing Ether and token prices. Ethereum remains the dominant player in the DeFi market, accounting for $130 billion, or 68% of the total TVL. Solana follows, holding $10.9 billion, which is 5.7% of the total TVL. Solana’s DeFi TVL saw a 14% increase from the previous month.
Decreasing Active Wallets Amid TVL Surge
Despite the significant growth in TVL, the DeFi sector experienced a decline in daily unique active wallets, indicating a shrinking user base. The number of active wallets fell by 21% to 1.75 million for the month, representing 17% of all Web3 application users. DappRadar attributed the increase in TVL to speculative trading around the potential launch of an Ethereum exchange-traded fund (ETF).
According to DeFi Llama, the 24-hour trade volumes of decentralized exchanges rose from $1.7 billion to $5.1 billion between October 1, 2023, and June 7, 2024. This surge in trading volume likely resulted in higher yields for liquidity providers and lenders, encouraging more crypto deposits into DeFi apps.
Broader Web3 Market Trends
While the DeFi sector saw a drop in active wallets, other sectors within the Web3 market experienced user growth. The gaming sector reported over 3 million active users, a 7.5% increase from the previous month. NFT marketplace users grew by 11%, reaching 1.52 million UAW, and Web3 social media apps saw a 29% increase, totaling 1.92 million UAW.
The total number of Web3 UAW has now reached 10.4 million, as per the June 6 report. An earlier report from April indicated that UAW had risen to 7 million in Q1 2024, up from 4.3 million in 2023. This data suggests a steady increase in users for Web3 applications, although some experts argue that onboarding difficulties may limit future growth in the industry.
