Q1 2020 Ethereum DeFi Report

An analysis of DeFi protocols and performance during the first three months of the year, including the zenith of ETH and USD locked in DeFi and Black Thursday.

Two events defined decentralized finance in Q1 2020: the zenith of ETH & USD locked in DeFi and March 12 “Black Thursday.”

ETH & USD Locked in DeFi

The Event: In Q1, the Ethereum DeFi community celebrated two milestones. First, on February 6, the total USD value of ETH & ERC-20 tokens locked in DeFi smart contracts surpassed $1 billion. The second milestone occurred on January 30, when the most ETH ever was locked in DeFi smart contracts: 3,178,695 million ETH.

The Importance: Even though ETH locked and USD value locked both declined notably after their heights until the end of the quarter, those metrics were only set back to their late-2019 levels, suggesting that overall the DeFi ecosystem has passed a threshold of resiliency and will be back on its upward trend shortly.

Black Thursday & COVID-19

The Event: On Thursday, March 12, crypto markets dropped nearly 40% — a market crash that coincided with a global and precipitous stock market decline. On March 12 and March 13, activity across Ethereum spiked, with many decentralized exchanges experiencing their most active days in history.

The Importance: Much of blockchain rhetoric positions the technology as a safe haven from the presumed mismanagement of traditional finance by major banks, corporations, and governments. Crypto, in its ideal form to many in the space, would not be correlated with the stock market, and would rather provide people with a more secure set of assets in which to store and invest wealth. Black Thursday revealed rather severely that, at least for the time being, those in the crypto space must acknowledge and begin to address a correlation with traditional markets.

The remainder of the Alethio Q1 2020 Defi Report includes further analysis into the two events, as well as further review of specific protocols, DeFi user behavior, DEX performance, and more.