According to a report by DappRadar.com, decentralized apps popularity exploded this year.
The new report on decentralized applications, or Dapps, showcases some exciting news about Ethereum and its decentralized applications. According to the report, titled “2020 Dapp Industry Report”, decentralized apps exploded in popularity. This report states that in 2020, “the top 10 DeFi dapps are responsible for 87% of Ethereum transaction volumes, or $223 billion in 2020”.
On top of this staggering amount, DappRadar continues by showing users that “95% of transaction volume growth belongs to Ethereum DeFi dapps”. The report states that DeFi drove decentralized application growth in 2020. DeFi is now the “dominant sector in terms of key metrics such as TVL (total value locked), AUW, and volume”.
Dapps and DeFi continue growing
This year boded well for dapps and DeFi. At the beginning of the year, DeFi Dapps accounted for less than $1 billion in total locked value. That number jumped to $16.5 billion in less than 12 months. Before 2020, few usable decentralized finance applications existed. Most of those had a lot of promise but only a niche base used them. That changed as decentralized lending platforms like Maker, Compound, and Aave, and decentralized exchanges like Uniswap, gained traction.
Now, almost a year after DeFi gained mainstream attention, the entire landscape behind Dapps looks different. Compared to DapRadar’s 2020 Industry Overview, the number of new DeFi Dapps skyrocketed. In 2019, only eight new DeFi Dapps emerged across the entire blockchain ecosystem. In 2020 projects created 238 DeFi Dapps. Of those, 106 exist on the Ethereum network. Interesting enough, the percentage of DeFi Dapps built on Ethereum did not drastically change (50% of Dapps were on Etheruem in 2019 and 45% in 2020). However, the volume exploded. It increased by almost 30 times the amount year over year.
What are decentralized applications? What is decentralized finance?
Decentralization is one of the foundations of blockchain technology. The technology emphasizes distributed control over something (a network, application, etc) compared to singular (centralized) control and decision making by one entity. With decentralization, the users and stakeholders control the decision making power of a network. As such, decentralized applications are applications without a single point of failure and control. Decentralized finance includes a subset of dapps that allows users to conduct financial transactions without using a centralized platform.
Rising DeFi dapp popularity follows continued financial and economic uncertainty around the globe. In many cases, users also see that they can generate much higher returns using DeFi dapps than traditional financial applications.