Data shows parabolic-style growth in layer-2-based DeFi and DEX platforms

For any project to be successful in the long-term, it is essential to innovate and solve the most difficult problems within the blockchain and cryptocurrency ecosystems.

The emergence of layer-2 technology such as Arbitrum, Optimism, and a bridge into the Avalanche ecosystem has revolutionized the way developers, investors, and builders interact with different protocols. Each facilitates fast, low cost transactions that improve the foundations of decentralized finance (DeFi), while making it easier for retailers-sized investors to take advantage of opportunities.

Token Terminal data shows that DeFi is still one of the fastest growing sectors in the crypto economy. This can be seen by the increase in total value locked (TVL), on protocols. Last week’s biggest gains were in cross-chain compatible networks, and layer-two protocol that allow for lower fees.

Top 6 weekly gainers in total values locked Source: Token Terminal

Pangolin and Trader Joe are two of the top-6 listed projects. They can be found in the Avalanche Network which has seen significant inflows as well as an increase in TVL ever since the launch of an upgraded cross chain bridge that allows Ethereum-based tokens to migrate to the Avalanche ecosystem.

Avalanche has a total value of $2.5 billion Source: Defi Llama

Projects such as Alchemix Finance or Rari Capital that have recently received votes to improve their ecosystems, and increase community involvement have found governance features to be a positive factor in generating new growth.

Just completed the first on-chain proposal! To sustain the DAO, 2,500,000 RGT have been created! We are grateful to you all for your votes and input. Treasury address: Transaction:
— Rari Capital DAO, @RariCapital September 19, 2021

Related: Bitcoin is great but real crypto innovation has moved to another place

Layer-1 projects and decentralized leveraged exchanges flourish

A second trend that emerged in data from Token Terminal was the increasing strength of options and derivatives trading protocols. This is because regulators are increasingly cracking down on central exchanges offering derivatives services and have loose KYC or AML requirements.

Top 6 weekly gainers in revenue from protocol. Source: Token Terminal

The chart shows that Hegic and dYdX were the top gainers in terms protocol revenue during the week. These are two protocols that offer investors decentralized derivatives as well as on-chain options trading.

Global regulators have intensified their scrutiny of derivatives and leveraged trading platforms in the recent months. At the same time, established exchanges such as Coinbase applied to offer futures trading services. This indicates that this sector is poised for continued growth, as cryptocurrencies become more mainstream.

dYdX also benefits from the fact it uses a layer-two system developed in partnership with StarkWare, which allows cross-margined perpetuals with minimal gas costs and trading fees.

Data suggests that Ethereum-competitors like Cosmos (ATOM), and Tezos, (XTZ), have all seen an increase of revenue over the last week. This indicates that the layer-1 war is heating up as the high fees on Ethereum continue to encourage users to explore other options.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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