Monolith Reflects: learnings from $7 million topped up
At the end of last year we posted our reflections on 2020, focusing on the growth of the cryptocurrency space in the midst of a global pandemic. Despite the devastating impact Coronavirus made on the world, DeFi flourished throughout the year. The trend has continued into 2021, and alongside the NFT boom, DeFi holds a place at the heart of the Ethereum network today.
Ethereum’s composable “money legos” have found a passionate user base, and there are now over 1 million addresses interacting with DeFi protocols. The total value locked, meanwhile, has soared to $40 billion.
2020 was also our biggest year yet. Back in July we published an in-depth report as we hit $1 million in cumulative card top-ups. We landed on that milestone in just over eight months. We hit $2 million only four months thereafter, and top-ups have steadily increased month-on-month since then.
In both January and February, we surpassed $1 million in Monolith card top-ups. As of today, we’ve received over $7 million in top-ups since we began this journey into the future. This report tracks our growth, as well as the explosion the DeFi space has experienced in recent months.
Monolith and DeFi’s User Growth
One of the key metrics that’s useful for us to analyse is user growth. The number of Monolith users increased by a factor of 5 in 2020, while total usage grew by a factor of 10. This correlates closely with the exponential growth of the DeFi space as a whole, which exploded from 100,000 to 1 million users from January to December 2020.
While this was largely due to the “yield farming” craze pioneered by Compound, the open nature of DeFi facilitates easy access to the whole ecosystem. As DeFi grew, we welcomed new members into our community, and they stayed to experience the world we’re building.
Monolith and DeFi Accruing Value
DeFi experienced significant growth in the second half of 2020, thanks in no small part to the “yield farming” boom. As the value deposited to liquidity pools increased, assets like ETH also saw significant gains.
At the same time, the narrative surrounding cryptocurrencies shifted as a number of institutional investors began to warm to Bitcoin’s value proposition as a form of “digital gold”. Several large companies also showed interest in the space for the first time, and announcements such as PayPal’s move towards adopting digital currencies made a positive impact on the price of ETH. Speculation surrounding the long-awaited Ethereum 2.0 upgrade was also a key theme to the end of the year; Phase 0 launched successfully on 1st December, marking the beginning of a move to a proof-of-stake consensus algorithm.
The combination of DeFi’s growth and positive sentiment surrounding cryptocurrencies has impacted the value of top-ups we received, particularly in recent months. Card top-ups surged past $1 million in January, the same month ETH surpassed its all time high price of $1,420 for the first time since January 2018. February also saw top-ups hit $1 million.
Moreover, a number of key developments to Monolith led to increased usage of our service. In September, we unveiled our money in upgrade, giving users a seamless fiat-to-crypto onramp from within our app. Since launching, this feature has contributed to significant month-on-month growth, culminating with a record seven figure sum in the last two months.
Stablecoin usage in Monolith and on Ethereum
Stablecoins saw exponential growth within the Ethereum ecosystem last year; they now account for over $30 billion of value on the Ethereum network. Dollar-pegged assets such as DAI and USDC are widely used across the network, often for DeFi activities such as yield farming.
While ETH continued to hold dominance in Monolith, accounting for 41.7% of historical card top-ups, our users have increasingly turned to stablecoins and other tokens to top up their cards. Of those available in Monolith, the most used are DAI, USDC and USDT.
In addition to the growth of stablecoins on Ethereum, one factor that’s likely affected the change in top-up distribution is our integrated ParaSwap feature. This tool enables in-app swapping between crypto tokens, and the number of monthly swaps peaked at 188 in November following our money in upgrade (June was also a big month for swaps, with 164 received in the weeks following our ParaSwap integration).
The use of stablecoins in DeFi is likely to increase, as real-world use cases for the technology appear. One example is the use of USDC to fight hyperinflation in Venezuela, which was facilitated by a partnership between Circle, Bolivarian Republic of Venezuela, Airtm with approval from the US government.
Community Chest
With every Monolith card top-up, users are charged a 1% community contribution fee of the crypto token used (excluding TKN). This commission goes to the Community Chest, a fund preserved for TKN holders. The Community Chest lives in a smart contract on Ethereum, and it can be viewed via Etherscan here.
Card top-ups surged in the second half of 2020, meaning the value of our Community Chest also increased. Moreover, the value of ETH has seen a significant rise. 1% of a total $7 million topped up equates to $70,000 deposited to the chest, but with ETH hitting record highs, the chest’s value in ETH has hit $344,433.
The fund was envisioned as a way of rewarding our community as Monolith adoption grows, as TKN holders can claim their share at any time using our Cash & Burn mechanism.
We’ve seen the value of our Community Chest hit a peak as card top-ups reach new record highs. Our hope is for the value locked in the chest to continue to grow in line with Monolith card top-ups.
Important note: the community chest shows several sudden spikes. This is because some deposits have been added manually, due to users with older versions of the Monolith wallet which aren’t automatically synced with the chest.
Conclusions
In conclusion, the last few months may have been the most important for the Ethereum economy and wider blockchain movement to date. Against the backdrop of Coronavirus, crypto proved its durability at a time when much of the world was filled with uncertainty. Bitcoin has seen a wave of mainstream adoption among investors who subscribe to its “digital gold” narrative, while DeFi has shown early promise. We believe that DeFi will experience further growth in 2021 and beyond.
As Ethereum and DeFi usage hit new record highs, Monolith has also seen exponential growth. The increase in new users and value topped up has shown us that we are on the right track. If DeFi is to continue to grow at its current rate, our space will soon need to prepare to introduce this transformative technology to the rest of the world. That’s what we’re currently working on, and the signs are telling us that the time to act is now. We are looking forward to what’s to come. A lot of that is hard to predict right now, but we know that it is unstoppable. And it is amazing.
The data for this report was accurate as at Monday 22nd February 2021.
