According to

CoinMarketCap:
DeFi Edition
Q3 2020
DeFi Report | Q3 2020

About
CoinMarketCap
CoinMarketCap was founded May 2013 — when the price of Bitcoin
was about $100. As the industry’s #1 cryptoasset information site,
CoinMarketCap is the most-referenced and trusted source used by
individuals, institutions, governments and the media for comparing
thousands of crypto entities across hundreds of exchanges.

CoinMarketCap’s mission is to showcase the cryptocurrency revolution,

and firmly stands for accurate, timely and unbiased information, which
enables each user to draw their own informed conclusions using
CoinMarketCap data.
DeFi Report | Q3 2020

Summary
The explosive growth of interest in decentralized significant growth. Some notable projects include
finance (DeFi) has made this past quarter one of the Chainlink (+$2.82 billion) and yearn.finance (+$715.7
most exciting periods in the cryptocurrency space. million), which only launched its token in mid-July.

The total market capitalization of cryptocurrencies
increased from $191.5 billion in the beginning of
2020 to $345.4 billion (+80.3%) and the total market
capitalization of altcoins increased from $60.9
billion to $144.6 billion (+137.3%).
While most of the increase can be attributed to Bitcoin
(+$69.0 billion), Ethereum (+$26.3 billion) and Tether
(+$11.4 billion), DeFi projects have also experienced
Some notable projects within the top 200 that have
seen the highest token price returns in Q3 are:
1. yearn.finance (YFI) (+1,938.4%)
2. xDai (STAKE) (+1,079.4%)
3. JUST (JST) (+564.3%)
4. Fantom (FTM) (+519.3%)
5. Band Protocol (BAND) (+490.3%)

Chart 1: Q3 Performance at a Glance

The following table shows

the performance of different
key cryptoassets and
categories at a glance:
DeFi tokens experienced
strong growth in Q2 and Q3
until early September, when
markets generally saw a
decent pullback in prices.

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DeFi Report | Q3 2020

Chart 2: Top 10 Biggest Drops

From Q3 High - Top 200

Chart 3: Top 10 Biggest Drops

From Q3 High - DeFi Projects

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DeFi Report | Q3 2020

Table of Contents

SECTION 1

05 Bitcoin Price and Dominance

SECTION 2

06 Crypto! Crypto! Read All About It

SECTION 3

08 DeFi Performance and Traffic

SECTION 4

12 More Than Just Ethereum:

Other DeFi Platforms

SECTION 5

14 Memecoins

SECTION 6

15 Report Conclusion

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DeFi Report | Q3 2020

SECTION 1

Bitcoin Price, Dominance

and Traffic Data

In Q3, Bitcoin tested the $12,000 price Chart 4: Bitcoin Price and Dominance
level multiple times and struggled to
sustain above the critical price level.
Overall, Bitcoin’s price has increased
from ~$7,200 in the beginning of the
year to the current price of ~$10,600
(+47.5%). 15.1% of the growth was
seen in Q3 alone.

While Bitcoin’s market capitalization has

grown from ~$130.6 billion to ~$199.6
billion year-to-date, Bitcoin’s dominance
has decreased from ~68.2% at the
beginning of the year to ~64.8% at the
beginning of Q3, currently ~58.1%. The
Chart 5: Bitcoin Price and Traffic Data
decrease can be attributed to the strong
performance of altcoins — especially
those related to DeFi — in Q2 and Q3.

Bitcoin remains one of the most viewed

cryptoassets on CoinMarketCap,
especially during the periods of high
volatility in mid-March, early-May and
late-July.

As discussed previously in According

to CoinMarketCap 2019 edition, our
traffic trends remain highly correlated
to cryptoasset volatility. Traffic on
CoinMarketCap has also been diverting
to altcoins — this report will return to
this point in Section 3a.

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DeFi Report | Q3 2020

SECTION 2

Crypto! Crypto!
Read All About It

We launched CoinMarketCap Headlines in July, and the headlines that have attracted most interest are:

• How To Add Liquidity To Uniswap Liquidity Pool: A • DeFi Dangers: $130 Million at Risk of Being Locked
Step to Step Guide (Coingape) in YF Value (YFV) (CryptoPotato)

• TronWallet Kicks Off In-App Offering of Klever
(KLV) Token Ahead of Klever App’s Launch (U.Today)
• $4000 To $1 In 5 Minutes: DeFi HOTDOG and Pizza
Present Free Fall on Their First Day (CryptoPotato)
• SUSHI DeFi Token Drops Over 99% as Top Holder
Dumps on Uniswap (Coingape)
• Top 10 DeFi Lending Platforms in 2020 (Coingape)
• Cardano long-term price analysis: August 23
(AMBCrypto)
• Max Keiser: Warren Buffett Will Start Panic-buying
Bitcoin at $50,000, Just Like Peter Schiff
(CryptoPotato)
• SUSHI Is the New DeFi Hit: $350 Million Already
Locked in Farming as the Token Dumped 99%
(CryptoPotato)
• Over 140,000 addresses have claimed their 400
UNI token airdrops (The Block)

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DeFi Report | Q3 2020

Of these 10 top headlines, six of them are

DeFi-related, reflecting the general interest
of readers in DeFi-related information.

Chart 6: Market Capitalization Breakdown

The obvious increase

in relative market
capitalization of ETH and
DeFi tokens can be seen
from this visualization.

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DeFi Report | Q3 2020

SECTION 3

DeFi Performance
and Traffic

The popularity of DeFi projects in the market is reflected in their performance this quarter.
The DeFi wave has brought many of these projects to new heights, including projects
related to oracles, lending, DEXs, yield farming and more.

Chart 7: YTD Performance

Chart 8: Q3 Performance

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DeFi Report | Q3 2020
DeFi projects (as a group) have outperformed the top
200 projects (BTC and ETH included) by a large margin
ever since February 2020.
The return on DeFi projects shows a maximum of a 30x
increase since the beginning of 2020, and almost a
7x increase since start of June. Even after the market
correction in early September, the figures still reflect a
healthy gain of ~28x and ~4.2x since beginning of the
year and start of July respectively.
Chart 9: Existing DeFi Projects vs. New DeFi Projects
DeFi projects (with LINK as a notable mention) have
seen a significantly greater increase in CoinMarketCap’s
traffic compared to other tokens in the top 200 ranking,
including BTC and ETH.
LINK’s traffic data had already showed a pick-up in
interest in the token in February 2020.
While ETH serves as the go-to platform protocol
for the majority of these projects, ETH’s return has
been lower than the return for DeFi projects listed on
CoinMarketCap. While ETH investors might still enjoy a
favorable return of 3.6x at the peak since the beginning
of this year, these figures appear modest compared to
the returns of the DeFi projects.
Traffic data on CoinMarketCap is used to attempt to
pinpoint the beginning of the DeFi wave.
In late June (the week of June 24), the interest in LINK
and other DeFi projects started increasing exponentially,
as seen from our traffic trends.
In the weeks of August 12 and September 2, interest in
LINK and other DeFi projects peaked, and we saw
25-30x more interest from our users as compared to
the start of the year.
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DeFi Report | Q3 2020
Following the peaks and market corrections, traffic for
DeFi projects has rapidly decreased — but the increase
in traffic for DeFi projects is still significantly higher
when compared to their traffic before June. This shows
that the crypto community is definitely still interested in
projects in the category.
Existing DeFi Projects vs.
New DeFi Projects
While the sharp rise in the popularity of DeFi in Q3 may
make it seem like a new concept, DeFi has been around
long before this sudden fervent interest. However, the
influx of new DeFi projects has brought in a large
amount of interest, capital, investors and speculators.
How do the “older” DeFi projects compare to the newer,
“catchier” projects?
Chart 10: Existing DeFi Projects vs. New DeFi Projects
To simplify our study, we used the launch date of
Compound’s governance token (COMP) as a milestone,
as it arguably popularized the concept of liquidity mining.
Out of 98 coins currently under the DeFi category on
CoinMarketCap, 54 of them launched before Compound
(such as ChainLink, Maker, Aave, UMA, etc.) and 44 of
them launched after (such as Yearn, Sushi, DMM, etc.)
We tracked their returns on equal-weighted basis since
start of Q3. From the data, the “older” projects appear to
have a stronger performance than the “newer” projects.
A few possible reasons for this outperformance could
be the capturing of the general upward price momentum
since Q2, a stronger operational track history, or just the
“older” projects’ possibly stronger foundation and wider
brand awareness.
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DeFi Report | Q3 2020

Chart 11: Existing DeFi Projects vs. New DeFi Projects

The biggest difference in return performance

appeared in mid-August, which is also the
period of the exponential rise of interest in DeFi.
As some new projects required the purchase
of “older” DeFi tokens to participate in liquidity
mining/yield farming, the buying interest into
the “older” projects increased as well.

Maker (MKR) was probably the most well-

known project in the DeFi space pre-2020.
However, with different projects entering
the space, its market capitalization share
decreased overtime while other projects like
ChainLink, YFI and Aave gained prominence.

Others include other projects that focus on

DEXs, yield farming, lending and payments,
as well as other asset-backed stablecoins
and synthetic assets. Some notable examples
include Uniswap, Sushiswap and Curve DAO,
amongst others.

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DeFi Report | Q3 2020
SECTION 4
More Than Just Ethereum:
Other DeFi Platforms
ETH is still the #1 platform for DeFi, while other smart-
contract platforms have only just started to develop
their DeFi ecosystem. The Tron ecosystem has recently
launched Just (JST) and Sun Tokens (SUN), and FTX has
developed the Project Serum (SRM) on Solana (SOL).
The following charts show the price performance and
traffic data of these platform projects over time since
the beginning of Q3.
Although Ethereum has been the go-to platform for
many DeFi projects, projects such as Kusuma (KSM),
Chart 12: Platform Projects Comparison
Solana (SOL), Polkadot (DOT) and Waves actually
enjoyed a stronger price performance while EOS
and Stellar (XLM) underperformed compared to
other projects.
Given the high gas costs during this period of strong
DeFi interests as well as trading activities, many
investors are looking into other platforms and
speculating if any of them would be able to provide
better platform services to projects – Kusama can be
seen as a proxy for the Polkadot platform which was
officially launched in late-August.
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DeFi Report | Q3 2020

Chart 13: Weekly Traffic Data of CoinMarketCap (scaled)

Chart 14: Weekly Traffic Data of CoinMarketCap (scaled)

In terms of traffic — other than Ethereum — Tron (TRX)
and Polkadot (DOT) had strong traffic in Q3, potentially
because of the launches of DeFi-related projects in the
Tron ecosystem and the official launch of the DOT, as
well as investors’ interest in the development of these
two ecosystems.
Waves had the highest jump in traffic in mid-August,
which was consistent with its price increase in mid-Aug
(~100% growth). However, its traffic compared to other
platforms remained relatively lower, similar to traffic for
Solana (SOL).
DeFi Report | Q3 2020

SECTION 5

Memecoins

Finally, the market has also seen an influx of memecoins in Q3, check these icons out and see how many you know!

• MEME • Cowboy.Finance
• Spaghetti (PASTA) • Zombie.Finance
• Pickle Finance (PICKLE) • Shrimp Finance
• YAM Finance • Salmon
• TENDIES • Walnut.finance
• TACO • Pancake
• Sushi • Bake
• KIMCHI • Rare Pepe
• Jiaozi • Brr
• Toast.finance • TrumpCoin
• BaconSwap • PutinCoin
• Noodle.Finance • Titcoin

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DeFi Report | Q3 2020
Report Conclusion
Final Thoughts on DeFi
(and Associated Risks)
All in all, Q3 was certainly a very exciting period
for all cryptocurrency enthusiasts. Volatile markets
provide participants with enormous opportunities to
act, observe and learn — but they also allow for the
emergence of risks.
The three risks we observed in Q3 — those associated
with tokenomics and smart contract risks and “rug-
pulls” — are worth highlighting. Rookie and seasoned
investors alike should have a basic understanding of
these risks when investing and interacting with DeFi
tokens and platforms.
Tokenomics — the release and distribution schedule
of any cryptoassets — is critical for any investor to
understand before in order to decide if the current
price of the token is under or overvalued. Instead of
following the hype, researching the purported value
and distribution mechanisms should lead to better
investment decisions.
Decentralized finance also does not mean that the
protocol you are interacting with is riskless. Staked
assets are subject to risks in code, but the risk of
malicious intent (“rug pulls”) is also possible.
Smart contract auditing firms help to mitigate such risks,
but as always, black swan events are rarely foreseen and
a unique chain of events might occur where the code
operates in a fashion that is totally unintended.
As always, do your own research when it comes to
investing in nascent technologies!
Concluding Remarks
Q3 has shown how fast a trend can accelerate in
the crypto industry, and arguably, how it can recede
as quickly as it started. The prices of DeFi-related
cryptoassets swung up in double digit multiples over
the course of weeks, and then also saw drops of more
than ~80% when the trend died down. This serves as
a stark reminder to all who invest in cryptoassets —
do your own research and always be very mindful of
the industry’s huge volatility.
Traffic on CoinMarketCap remains extremely helpful in
understanding sentiment of investors and tracked the
DeFi craze as it accelerated and receded. As mentioned
in our previous report, traffic tracks volatility, and this
has certainly been the case when juxtaposing traffic
with the market cap data of DeFi tokens.
While the “craze” has certainly tapered off, it remains
to be seen if DeFi will stay relevant in the months or
years to come. While the triple digit yields for liquidity
provision have all but disappeared, the infrastructure
of projects still remains and other platforms besides
Ethereum have started building and supporting their
own interpretation of DeFi.
We remain cautiously optimistic that there will be
further waves of DeFi innovation that seek to disrupt
traditional finance as we move towards a less-
centralized world.
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coinmarketcap.com