What have trading platforms, DeFi, and wallets experienced in 2020?

Original author: TokenInsight

In 2020, The digital asset market has witnessed the real explosion of DeFi and entered its period of prosperity. According to TokenInsight data, the total lock-up volume of the DeFi ecosystem has exceeded US$22 billion by the end of the year from less than US$800 million at the beginning of the year, with a growth rate of more than 2650%. The total market value of DeFi projects reached 19.6 billion US dollars, a 12-fold increase.

The prosperity of the digital asset market has also brought new activity to the wallet market. In terms of user growth, the number of global wallet users has exceeded 60 million in Q1 2021, reaching 64 million. Compared with the data of less than 50 million in Q1 2020, this is an increase of 14 million, or about 30%.

Spot volume increased by 53% compared to 2019

In general, In terms of spot, the annual trading volume of digital asset spot in 2020 will reach 20 trillion US dollars, an increase of 53% compared with 2019.

The spot trading volume of the whole market in each quarter of 2020, source: TokenInsight

Compared with the derivatives market, the spot market has entered a relatively mature stage from the perspective of transaction data. The first three quarters of the spot market showed a continuous shrinking trend. It was not until the fourth quarter that Bitcoin skyrocketed and the bull market started that the overall transaction volume rebounded. March is also the month with the largest trading volume in the whole year, and the trading volume on the 312 day reached more than 73 billion US dollars.

A lot of things happened in 2020, and the violent market fluctuations were accompanied by regulatory incidents on trading platforms. In the end, throughout the year, Binance’s spot trading volume reached the top of the industry, about $1 trillion, which was the combined trading volume of Huobi and OKEx, which ranked second and third.

At the same time, due to the entry of institutions in the fourth quarter, Coinbase, Bitstamp and other "compliant" trading platforms have benefited a lot. In terms of transaction volume growth, Coinbase ranks first.

In terms of platform currency, "312" has a great impact on the transaction volume of platform currency. After experiencing "312", the transaction volume of most of the platform tokens shrank in the second quarter, but there are exceptions, such as Binance's BNB, the transaction volume still increased slightly in the second quarter.

From the perspective of the whole year, although the prices of most platform tokens are rising, among them, Binance’s BNB and OKEx’s OKB have the highest increase. For some things that happened in 2020, the price fluctuations are relatively large. In short, the price increase of all platform coins has not outperformed Bitcoin.

The most eye-catching things are of course the 3/12 crash, the entry of institutions and the skyrocketing bitcoin. In addition, the most eye-catching industry hotspots in 2020 One of them is DeFi. In terms of decentralized transactions, at the beginning of the year, the total spot trading volume was less than 0.01%, and by the end of the year, it was able to maintain more than 1%. Many DeFi assets also outperformed the market's average return on investment in the third quarter.

At the beginning of 2021, the price of Bitcoin continued to hit new highs, and the overall market is expected to continue the bull market at the end of 2020, and of course there will be fluctuations and callbacks.

Derivatives will grow faster than spot in 2020

Traditional market derivatives transactions The quantity is more than ten times that of the spot. In the field of digital assets, derivatives will grow faster than spot products in 2020. For the first time in the fourth quarter, the quarterly trading volume surpassed that of spot products, and the annual trading volume reached 12 trillion US dollars. The transaction volume is far from reaching the traditional market share, so there is still a lot of room for growth in the future.

2019Q4-2020Q4 total market futures trading volume, source: TokenInsight

The trading volume of the options market in 2020 (not including exotic options yet), source: skew; TokenInsight

The outbreak of the derivatives market in the fourth quarter was also caused by Driven by the skyrocketing price of Bitcoin. The highest trading volume of the year occurred on November 27, exceeding $140 billion.

In terms of open interest, from the perspective of the whole year, it also continued to rise, of course, interspersed with 312 open interest fell precipitously. By the end of the year, open interest had reached $17 billion.

A trend in the derivatives market in 2020 is that the product types of various platforms are constantly improving and enriching. For example, Binance launched a currency-based perpetual contract and launched a delivery contracts; Huobi launched U-standard perpetual contracts, etc. These trends all illustrate the platform's emphasis on the derivatives market and the improvement of the derivatives territory.

The highest trading volume of derivatives in the whole year is still Huobi. BitZ ranks sixth in trading volume, with an annual trading volume of more than 340 billion US dollars. The mechanism of BitZ’s perpetual contract product is relatively simple and easy to understand. It has adopted position restriction measures, and the maximum number of positions in a single contract does not exceed 100,000. The position restriction alleviates the problem of liquidation and automatic reduction of positions caused by the liquidation of large accounts, and has a certain protective effect on individual investors.

In terms of user education, BitZ’s contract elements are clearly explained and easily understood by users.

Also noteworthy is Binance. After the BitMEX incident, the trading volume of the BitMEX platform outflowed, and Binance benefited; at the same time, due to the bull market in the fourth quarter, The trading volume of Binance derivatives has grown by leaps and bounds in the fourth quarter, with an average daily turnover of 13 billion US dollars, and the annual trading volume also exceeded 2 trillion US dollars.

It is also worth noting that CME and other compliant trading platforms, CME's year-end holdings reached 1.6 billion US dollars, which is of the same order of magnitude as Binance and OKEx , the highest in the market.

Another trend in the derivatives market in 2020 is the huge increase in the trading volume of options, although it is still far below the trading volume of perpetual contracts and delivery contracts volume, and due to the professional nature of the products, the threshold is relatively high, but the annual turnover showed an exponential growth trend.

Throughout the year, Deribit has always maintained a far-leading position in the market, and it is also the option platform with the most concentrated institutional users. Corresponding to the increase in trading volume is the layout of the platform for options and the entry of new players. Both Huobi and Binance have launched option products in 2020, and new players such as bit.com have also achieved good results after entering the market in 2020.

The total market value of DeFi projects has doubled by 12 times

In 2020, many loans have emerged and emerged , decentralized exchange platform (DEX), decentralized derivatives, aggregators and other types of new projects. The daily trading volume of DEX increased from less than US$5 million at the beginning of the year to US$1.28 billion at the end of the year. The total loan volume of loan projects has increased by more than 20 times from US$150 million at the beginning of the year to US$3.6 billion. DeFi projects will basically achieve positive returns in 2020, with an average return rate of 718%, among which Yearn.Finance has the highest return rate of 2,788%.

DEX is to solve the problems of centralized trading platform asset custody and transaction restrictions. In 2020, the automatic market maker (AMM) model will be implemented effectively, and the transaction volume and usage will far exceed the DEX of the order book model on the chain. However, AMM also has limitations such as high slippage and impermanent loss. Therefore, as liquidity mining led to the outbreak of AMM in the third quarter, the industry began to pay more attention to the shortcomings of existing AMMs, and new AMMs will focus on solving problems such as high slippage and impermanent losses.

Another thing worthy of attention is the algorithmic stable currency, which adjusts the total market supply according to the algorithm, and expands the supply when the price is higher than the target price. When the price is lower than the target price, the supply is reduced accordingly, and the supply is adjusted to ensure that the currency price is stable at $1. Ampleforth adopts the "Rebase Algorithm Model" of a single Token, further controls the price through the control of the circulation, and increases or decreases the Token in the user's account according to the price situation; another model adopts the "Seigniorage Model" model through a certain incentive mechanism. Affecting dynamic balance, such as Empty Set Dollar, Basis Cash and other projects, the complexity is enhanced, such as the introduction of a dual currency model to increase stability. The complexity of the protocol algorithm has increased, and the volatility has also increased while adjusting the price. It remains to be seen whether the "stability" of the algorithmic stablecoin can be truly achieved.

With the rise of liquidity mining in the DeFi ecosystem and the development of lending agreements, the market demand for fixed-rate projects has increased. In the field of DeFi , fixed rate projects use the Token model to maintain fixed rates, and more complex derivatives agreements provide users with more investment options and risk hedging solutions.

According to data from DappRadar, there will be 106 new DeFi DApps on Ethereum in 2020, accounting for 44.54% of the total new additions in that year. There are only 4 of them. The leading position of Ethereum as a smart contract platform is currently difficult to shake, and the Gas fee of Ethereum continues to rise, but it is believed that the arrival of Ethereum 2.0 will bring it a new breakthrough point. Ethereum 2.0 is gradually being deployed, with unlimited imaginative application space .

There are 132 new DeFi DApps outside of Ethereum, accounting for 55.46% of the total additions, exceeding the number of new additions on Ethereum. Other public chain projects are also constantly building the DeFi ecosystem. In addition to Polkadot, various trading platforms are also strengthening the DeFi layout and have certain advantages. In addition to launching DeFi project tokens, the trading platform also introduces DeFi products to participate in ecological construction by building a DeFi zone; on the other hand, it also builds its own DeFi ecosystem through the development of public chains.

In April 2020, Binance released a white paper. In September, Binance Smart Chain (BSC) was officially launched, and then announced to provide $100 million in funding to support developers Developed based on Binance Smart Chain. Through large-scale acquisitions and investments, Binance Smart Chain has now formed a variety of fields covering decentralized trading platforms, lending, aggregators, and wallets, and has maintained a strong development trend since its launch. In terms of Huobi, Huobi established the DeFi Lab in early August, focusing on the investment and incubation of DeFi projects. The Huobi ECO Chain (Heco) mainnet was launched in December and has reached cooperation with several projects.

The total lock-up volume of DeFi in 2020, source: TokenInsight

Outlook In the future, the underlying infrastructure of DeFi will continue to improve, providing a good foundation for more diverse and complex product innovations, and the continuous enrichment of products will also provide investors with more choices. The continuous enrichment of the ecology will help form more benign competition, screen out better projects for the entire ecology, and form a more stable ecological pattern.

With the popularity of DeFi, the wallet follows the pace of the market

Compared to 2019 During the bear market period of Q1 and Q2, the growth rate was nearly 60%. The best annual user growth performance was in November and December last year, with 4.67 million and 3.09 million respectively, and the increments both exceeded 5%. Among them, the Kcash wallet users with a better increase can reach 1.5 million.

The number of visits to webpage users has also achieved steady growth, which is also caused by the external effects brought about by the hot market.

Among the top 10 digital asset wallets counted by TokenInsight, the total number of visits reached 140 million.

The third and fourth quarters of 2020 alone have increased by 32%, from 22 million in July to nearly 30 million in December. Among them, there was a slight negative growth in September and October, but with the steady recovery of the market, the number of visits to the wallet application also achieved a growth of more than 30% in December.

As an important user traffic entrance, in order to ensure the increasingly diverse needs of users, the industry is constantly enriching the number of supported public chains, and the ecological connectivity is gradually reflected. Since 2019, the average number of supported public chains has increased from less than 10 to 25.

In addition, with the popularity of DeFi at the end of this year, various wallets follow the pace of the market, link the DeFi ecosystem, and gradually support more new DeFi projects, such as Uniswap , Compound and other high-quality agreements, improve the DeFi browser and a variety of rich DeFi financial products, some wallets such as Atoken will specifically integrate the Defi recommendation area, and provide Dex aggregation products.

More and more wallets have integrated the WalletConnect function that links DApps and mobile wallets, providing channels for users to trade and transfer money in DeFi applications. As more and more PoS projects start staking, the pledge staking service has also been responded by the wallet market, especially after the launch of ETH2.0, pledge mining has become a hot topic in the market.

The high-speed growth market also makes hackers more frequent. According to the 2020 Digital Currency Anti-Money Laundering Report released by PeckShield, a blockchain security organization, there will be 170 hacking incidents in 2020, an increase of 300% compared with 2018 and 2019; An increase of 660%.

There are also many wallet-related attacks. The hardware wallet Ledger experienced a data breach in July 2020, and Trezors experienced a data breach in October and December 2020. Under phishing attack.

Security is the most important element for wallet customers. Ensuring the security of customer assets is also the foundation of every wallet. Whether it is a hardware or software wallet, strengthen security The importance of sex is a key link that cannot be ignored in future development.

Looking forward to the future, the development of the digital wallet industry requires more firm confidence. While innovating, it is also necessary to prevent and control market risks during the bull market bubble period. Starting from itself, "from the inside to the outside" to provide users with more high-quality products and services.

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