eToro report: DeFi is expected to reach the level of 2017 ICO boom

Original article: Decrypt, author: Liam Frost

Translator: Yu Shunsui, Odaily Planet Daily

summary

• According to eToro’s quarterly report, altcoin trading volumes increased significantly in the third quarter.

• Ethereum-based decentralized finance (DeFi) platforms have played a major role in this growth.

• DeFi could reach the levels of the 2017 ICO craze.

Cryptocurrency trading platform eToro released its quarterly report on Oct. 14, showing a significant shift toward altcoin trading in the third quarter of 2020, while BTC’s global trading volume on its exchange decreased by nearly 40%.

According to the report, global altcoin trading volumes increased significantly across the board in the third quarter. For example, among eToro’s top 10 cryptocurrencies, Binance Coin (BNB) and Tezos (XTZ) saw trading volumes increase by 46% and 37% respectively in the third quarter. Despite the growth, both lagged behind in terms of trading volume growth among the top coins.

Ethereum (ETH) and Cardano (ADA) both saw their trading volumes on eToro increase by around 90% in the third quarter. Tron (TRX), NEO, and EOS saw their global trading volumes surge by 203%, 153%, and 175%, respectively. In contrast, Bitcoin was the only coin among eToro’s top 10 cryptocurrencies to see a decline in global trading volume, down 38%.

Among eToro’s US clients, the trend is largely the same. While Bitcoin’s volume increased 17%, most altcoins have outperformed Bitcoin so far, with most seeing volume gains, some even seeing gains of over 200%.

This surge is mainly due to the surge in popularity of DeFi projects, which also gave Ethereum a huge boost.

Guy Hirsch, Managing Director of eToro USA, explained, “The continued rise of DeFi has played a huge role in the surge in altcoins and Ethereum, with returns in many cases approaching levels seen during the ICO boom of 2017.”

The researchers noted that all decentralized applications built on Ethereum, including DeFi, require ETH to some extent to operate. Since ETH “cannot be economically extracted,” this becomes a key aspect of ETH’s value proposition.

The report states, “Over 7.5% of the total ETH supply is currently locked in DeFi. This figure was only 2.7% at the beginning of 2020. This shows a growing interest in Ethereum’s use cases and tells us that investors are becoming more confident in using ETH as collateral. In theory, this means that there is less ETH to sell on the market.”

The rise in DeFi’s popularity over the past few months has also played a major role in attracting new retail investors to the crypto space, boosting cryptocurrency adoption in general.

Joshua Frank, CEO of digital asset data provider The TIE, said, "While the second quarter of 2020 was characterized by continued improvements in infrastructure and signs of emerging institutional support, the third quarter reminded us that crypto is still a retail-dominated industry. In the third quarter, although MicroStrategy's $425 million investment in Bitcoin was undoubtedly a bright spot, DeFi, Yield Farming, NFT and altcoin rebounds were still the dominant factors in the third quarter."

He also compared DeFi to the ICO craze of 2017, although DeFi is not yet as large.