DeFi 1.0 vs DeFi 2.0 – On-chain Insights

An introduction to the rise of DeFi 2.0 and the problems they attempt to solve.

DeFi (Decentralised Finance) is a novel blockchain-based form of finance that does not depend on centralised financial intermediaries (such as banks or exchanges), but instead uses smart contracts on blockchains.

DeFi has proved to be tremendously popular, with total value locked rising above $270 billion on 26 November 2021. One of DeFi’s key attractions is certainly its high yields, which are far above what banks and most other traditional financial instruments can offer. For example, blue-chip DeFi protocols (e.g. Curve, Sushi) typically offer around 2%-15% APY on various crypto assets, while other riskier protocols may have eye-popping yields such as 35,000% APY.

This report first gives an introduction to the rise of DeFi 2.0 and the problems they attempt to solve. Following that, it will show how the traditional players (DeFi 1.0) are affected by the new trend of DeFi 2.0, based on several on-chain metrics.

Read the full version of DeFi 1.0 vs DeFi 2.0 – On-chain Insights here.