The decentralized finance ecosystem continues to grow despite recent challenges, as overall crypto usage reaches record levels, venture capital firm Andreessen Horowitz (a16z) said in a new report.
In its “State of Crypto” report released on October 16, a16z noted that the crypto industry has seen a major spike in activity over the past year. The industry’s growth trajectory is “reminiscent of the early adoption of the Internet.”
For example, as of September 2024, 220 million addresses interacted with protocols across the blockchain ecosystem, more than triple the numbers recorded at the end of 2023. Approximately 100 million of these active addresses were on Solana (SOL ), a blockchain network that saw a massive spike. in activity.
Besides Solana, other networks seeing a significant increase in active addresses are Near Protocol (NEAR), Coinbase’s Layer 2 network, Tron (TRX), and Bitcoin (BTC).
Stablecoin and crypto regulations
The report also highlighted several key growth metrics and issues surrounding the crypto industry since a16z’s first State of Crypto report in 2023.
One of the main takeaways is that crypto has become a significant political issue amid the US elections. However, the United States lags behind the European Union and the United Kingdom in public engagement regarding crypto regulation.
The market has also seen considerable developments around stablecoins, including their regulation and usage. Notably, stablecoins have become a top 20 holder of US Treasury securities, with a Coinbase report showing marked growth in Q3 2024. Top players include Tether’s USDT and Circle’s USDC.
Additionally, improving infrastructure and the growing intersection of blockchain technology and artificial intelligence have further enhanced the growth of the sector.
DeFi continues to grow
DeFi has been one of the areas of crypto that has seen the most usage on daily active addresses over the past year.
“Since DeFi arrived in the summer of 2020, decentralized exchanges, or DEXs, have grown to account for 10% of spot crypto trading activity – all of this happened on centralized exchanges ago is barely four years old,” the report said.
DeFi protocols across the ecosystem now represent over $169 billion in total value locked. Major platforms include Lido, Aave, Uniswap, EigenLayer, WBTC and ether.fi. These decentralized platforms continue to attract users while traditional financial institutions, such as US banks, face constant challenges.
According to a16z, the top blockchains in terms of builder activity or interest include Ethereum (ETH), Solana, and Bitcoin.
While Ethereum still attracts the greatest developer activity, with 20.8% builders, Solana has seen significant growth in this sector, going from 5.1% in 2023 to 11.2% in 2024.
Base also saw a notable increase in developer activity, from 7.8% to 10.7% year-over-year. Bitcoin, which saw an increase in DeFi-related activity, saw builder interest increase from 2.6% to 4.2%.
