Is Base eating into ETH TVLs
Over this past week, the Web3 ecosystem was mostly stable in terms of TVL with a few standout projects dictating the recent trends that are pitting newcomers like Base against established rivals like Ethereum. Here are the highlights from this week in Web3.
Ecosystem TVL Growth
TVL is an essential indicator of how much capital is currently engaged in the decentralized finance (DeFi) space. Here are some key observations from TVL growth data we tracked this week across 209 ecosystems, around 50% of which experienced TVL growth, resulting in overall stability:
- Base grows TVL by 11.6%, possibly eating into Ethereum’s dominance. Ethereum is still far and away the biggest ecosystem, with a $49.7B TVL dwarfing second-place Tron’s $5.6B, but it lost $94.6M (-0.77% of total TVL) this week amid better performance by rivals such as Base and Tron. This week, Base added $127.2 million to its locked-in funds, as it continues to integrate major Ethereum DeFi products like Curve and Uniswap, while hosting trendy new projects such as Aerodrome and Friend.tech. This trend has some observers referring to the heightened competition as a “vampire attack” against Ethereum and other major ecosystems like Arbitrum and Optimism, which respectively lost $18.3M n and $13.2M in TVL.
- zkSync Era rebounds. In a nice change of pace, zkSync Era grew its TVL by about $4M, following weeks of decline. This ecosystem likely benefitted from Binance’s integration of Ethereum on zkSync Era, allowing the exchange’s users to deposit and withdraw $ETH tokens on the zkSync Era platform.
- Tron tops TVL growth value rankings. Tron added $390.5M to its TVL this week, propelled by additional funds on projects like Justlend (+$365.7M), stUSDT (+$153.7M), JustStable (+$52.5M) and JustCrypto (+$50.7M)
Project TVL Growth
Diving deeper into the projects’ TVL growth, the 0xScope team spotted positive trends from a handful of projects that stood out in an otherwise stable week for crypto.
- Aerodrome is Base’s newest TVL star, easily outruns Curve. Base just keeps gaining new DeFi standouts every week as it continues its TVL rise. This week’s hottest project on Base: Aerodrome, a token swap product created by Optimism’s Velodrome, which quickly gained $170M in TVL in two days and helped Base raise its overall TVL to more than $400 million. As a result, Aerodrome saw 7x TVL this week, outpacing direct competitor Curve, which lagged behind despite growing its TVL on Base by 87.51% following its recent integration with the Coinbase-backed platform.
- Lybra sees 35x TVL growth thanks to V2 launch. Lybra, the DeFi platform behind the interest-bearing, liquid staking derivative-backed stablecoin eUSD, rolled out Lybra V2 on August 31. The platform then backed the launch with a recent mining program that granted 1.5x reward bonuses to miners. This has resulted in renewed interest in Lybra, as shown in the 3499.78% growth of its TVL to about $70M. Even a $389,000 sell-off of $LBR tokens by an early investor in the project did little to stop the platform’s recent momentum.
- ParaSpace grows TVL 203x following ParaX debut. Another project that leveraged new product launches to exponentially grow its TVL is cross-margin NFT lending product Paraspace. On Sept. 6, the project officially merged with Parallel Finance to launch ParaX, a new Web3 super app powered by account abstraction and zkVM. As a result, more than 700 users migrated about $25M in funds to ParaX, resulting in a 20303.71% growth in TVL for the project.
Project User Growth
Project user growth can offer insights into the adaptability and popularity of specific projects. Here’s what stood out:
- Airdrops drive user growth, possible Sybil attacks. In what has been an overall trend in recent weeks, airdrops have become the main source of user growth for some of the top projects in our rankings. Based on 0xScope analysis into new addresses and users this week, projects that are mostly used for airdrops have a high address-to-user ratio, like Stargate (12.26 addresses per user on BNB Chain, 4.15 addresses on Arbirtum) and zkBridge (13.08 addresses per user on BNB Chain). These numbers indicate that airdrop-oriented projects are at higher risk for Sybil attacks, because the creation of large number of pseudonymous entities across fewer real users is likely to pose reputational dangers to these projects. In comparison, Bungee, the top project in this week’s rankings, has only 1.93 addresses per new user on Arbitrum, mainly driven by the project’s cross-chain usage as a bridge aggregator.
- Too many addresses for new Uniswap users on Ethereum. One project that caught our attention this week is Uniswap, whose new users have each connected an average of 20.88 addresses to its Ethereum app. This high address-to-user ratio for Uniswap is likely because of the high usage of Telegram trading bots for the DEX, particularly for the instant swapping of crypto assets for $ETH and/or stablecoins.
- Even social apps have too many addresses per user. Quest3 & CyberConnect, two Web3 social network projects on the list, have also shown high address/user ratios, with 5.46 for CyberConnect and 4.57 for Quest. Web3 social media products are also likely to be dominated by airdrops and other promotional activities by Web3 projects that use these services to grow their communities.
- BNB Chain apps have higher address/user ratios. Based on our analysis of 87 projects that we tracked for user growth this week, new users on BNB Chain apps have averaged 5.45 addresses per user, compared to 3.62 on Ethereum and 2.77 on Arbitrum. This trend is influenced by many other factors, but these conditions merit further study into user behaviors across multiple blockchains.
The past week’s crypto trends paint a picture of increased competition across ecosystems amid an overall stable week for TVLs. Whether Base continues to add to its roster of trending apps remains to be seen, but new developments across projects are always a good thing for the general health of the Web3 industry. Meanwhile, the continued dominance of airdrops as a deciding factor into projects’ user growth is likely to pose new challenges such as potential attacks and the lack of sustainability in usage.
Notes:
- Users, as defined by 0xScope’s tools, pertain to real users behind addresses, calculated by 0xScope’s proprietary entity and bot recognition algorithm.
- TVL stands for total value locked in a project.
