CoinGecko’s 2021 report noted that DeFi has managed to diversify from Ethereum into other chains at a rapid pace. The NFT market, on the other hand, has seen a meteoric rise thanks to the complementary realms of Metaverse and GameFi.
Drastic fluctuations in the DeFi ecosystem
According to the last report by CoinGecko, the market capitalization of decentralized finance protocols has increased 7.5 times from $20 billion to $150 billion in 2021. Its dominance has more than doubled from 2.8% to an all-time high 6.5%.
The emergence of DeFi 2.0, enabled by next-generation products that seek to accelerate existing protocol designs, resulted in a thriving final quarter of the year. The report also mentions that increased incentives for new alternative EVM networks, including Cronos, Aurora, and Boba, have further boosted the demand for DeFi tokens on these blockchains.
Towards the end of the year, the crypto market continued to oscillate between fear and extreme fear. This sentiment has seeped into the DeFi space as well, leading to the market cap retracement from an all-time high of $174 billion in November.
The DeFi sector has undergone massive changes throughout the year. On the one hand, Ethereum and Binance Smart Chain emerged as winners in the first quarter. The following quarter saw EVM-based networks such as Polygon and Fantom rise to prominence avoiding gas fees and network congestion. In the fourth quarter, non-EVM chains such as Solana and Terra gained ground.
CoinGecko observed that the total TVL for the two blockchain networks increased by 5% and 7%, respectively. Ethereum continues to maintain its position as market leader. But it’s no surprise that blockchain is gradually losing its dominance, thanks to the emergence of viable alternatives.
Additionally, yield aggregators and insurance sectors gained the upper hand while regular bigwigs such as DEXs, oracles and lending platforms suffered losses.
NFT Enters the Mainstream Consciousness “Big-Time”
The popular OpenSea marketplace contributed the most to NFT trading volume in 2021. The ten largest marketplaces collectively saw nearly $24 billion in total trading volume.
OpenSea accounted for a 61% majority, while Axie Infinity contributed 17%, followed by Crypto Punks at 10%. Although non-fungible tokens have been around for a while now, it wasn’t until the “NFT summer” that the trading volume saw significant growth.
Ethereum and Ronin chains led the growth of NFT trading activity. The combined market share was 88%. Other Layer 1 protocols such as Polygon and Solana quickly followed the trend and expanded their NFT capabilities.
Meanwhile, CryptoPunks managed to retain its position as the “collection with the highest floor price” at the end of the year, even after being briefly knocked down by Bored Ape Yacht Club (BAYC).
Some of the crucial highlights of the NFT sector were Jack Dorsey’s very first tweet, World Wide Web source code, entry of iconic auction houses – Christie’s and Sotheby’s, mentions of – Snoop Dogg, Grimes, Post Malone, big brands like – Adidas, Nike throwing the hat in the ring among others.
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