📊DeFi Users Like BNB Chain and Tron

GM Defiers!

Today we take stock of the broader DeFi ecosystem. Data shows that Ethereum is the only major chain to lose users in the bear market, as people choose to transact on cheaper blockchains like BNB and Tron. Meanwhile, over 1M Ordinals, which are NFT-like assets, have been inscribed on the Bitcoin blockchain. Leveraged interest swaps from Voltz are drawing speculators with over $12B in notional volume traded. And finally, Rook, a long-running Ethereum project, will likely splinter amid a clash between the team and community.

✍️ In today’s newsletter:

• Ethereum is the only major chain to lose users in the bear market
• Over 1M ‘Bitcoin NFTs’ have been created
• Voltz courts speculators in DeFi rate markets
• Ethereum project Rook to split into two DAOs

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🎬 WATCH

Watch our video on the potential declining influence of the US Dollar, and our podcast with Harsh Rajat, the founder of Push Protocol and a leading figure in the world of decentralized messaging.

DeFi Adoption

Users Choose Tron and BNB Chain Over Ethereum Despite Falling Fees

TLDR Ethereum’s daily active users have dropped 16% over the past year, while Tron saw an 83% increase, Bitcoin 42%, BNB Chain 22%, and Polygon 21%. Tron has the highest number of daily active wallets at 1.5 million, followed by BNB Chain, Bitcoin, Polygon, and Ethereum.

SO WHAT The decline in Ethereum users suggests that its comparatively high fees remain a barrier for newer crypto users. Meanwhile, the growth of other networks highlights the importance of low fees and accessibility in driving user adoption. Ethereum’s growing Layer 2 ecosystem offers a promising alternative for users looking to avoid high fees on the mainnet.

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NFTs

Bitcoin Surpasses 1M Ordinals Inscriptions

TLDR Over one million NFT-like assets have been inscribed on the Bitcoin network using the Ordinals protocol, which leverages upgrades that came to Bitcoin in 2017 and 2021. The growing popularity of Ordinals suggests the new asset class is here to stay, which could have long-term implications for the financial health of the Bitcoin network.

SO WHAT Ordinals have already contributed tens of millions of dollars to the Bitcoin security budget and could help miners earn money beyond block rewards. Increased usage of the blockchain could lead to more investment in computing power and mining, making it harder to attack the network.

DeFi Interest Rates

Voltz’s Growth Shows You May Need Speculators For Fixed Rates to Work in DeFi

TLDR Voltz, a protocol that enables traders to swap between fixed and variable interest rates, has seen a surge in trading activity. The interest rate swap market in traditional finance is worth $18 trillion globally, and DeFi developers see these instruments powering the next generation of lending protocols.

SO WHAT Voltz’s success is an indicator that fixed-rate DeFi products are gaining traction and highlights the potential for DeFi to innovate and replace traditional finance tools. However, it also reveals that DeFi is still mostly driven by speculation, and the lack of productive businesses could be a concern for its long-term viability.

DAO Governance

Ethereum Project Rook is About to be Splintered

TLDR Rook, a protocol on Ethereum, is facing a possible split after accusations that management was conspiring against token holders. The DAO is currently voting to create an independent, spin-off organization that would receive almost 60% of the DAO’s assets, while management would keep the remaining assets and the rights to its intellectual property. The protocol’s governance token, ROOK, is up more than 25% over the past week.

SO WHAT The controversy highlights the challenges of managing decentralized organizations, as tensions arise between management and token holders. The drama is also part of a broader trend in the decentralized finance (DeFi) space, where many protocols are facing similar challenges in the aftermath of the bear market.

🔎 FROM OUR REPORTERS

Here’s what Owen’s watching this week👀

• Ribbon launched a decentralized options exchange built on a custom L2 with the OP stack
• Debt DAO launches its revenue-based financing product

🌍 ELSEWHERE

• How to Watch Shanghai: The Completion of Ethereum’s Merge Upgrade (Galaxy)
• Sei Raises $30M at $800M Valuation to Build Layer 1 Focused on Limit Order Exchanges (TechCrunch)
• Brave Integrates With Solana Name Service (Twitter)