Nearly all decentralized finance (DeFi) transactions are based on Ethereum

Nearly all decentralized finance (DeFi) transactions are based on Ethereum.

DappRadar, a site that ranks and tracks decentralized apps (dapps), issued a report this week that shows how in the third quarter of this year, transaction volumes in the DeFi world hit $125 billion, an increase of $113 billion since 2020’s second quarter. 96% of the total transaction volume took place on the Ethereum blockchain.

The total value locked into Ethereum’s smart contracts also surpassed $10 billion, the report said — with Uniswap, MakerDAO and Curve leading the way. Today, the total locked in DeFi smart contracts sits at $10.82 billion. Back in June, it was about $1 billion.

This shows how the Ethereum blockchain dominates the decentralized finance market. Though other blockchains are trying to get in on the action, none even come close.

The report noted that the biggest contributors to the Ethereum protocol in Q3 were Uniswap, Sushiswap, Balancer and Compound — which generated 56% of the daily active wallets on Ethereum.

The EOS protocol also picked up momentum in Q3; Defibox, Dmd.Finance and the DeFis Network generated over 4,300 daily active wallets.

But why such a massive spike in interest in the DeFi world in Q3? Yield farming, which comprises protocols issuing additional tokens to users in a bid to encourage loyalty.

DappRadar’s report said that yield farming well and truly exploded thanks to decentralized lending protocol Compound. In the first half of June alone, Compound transaction volume hit $4 billion.

And the rise of decentralized exchanges Uniswap and later SushiSwap led to billions being poured into the DeFi market, the report added. In September, $33 billion (60% of total DeFi transaction volume) was generated by Uniswap when it released its UNI token.

DeFi dapps also made huge amounts of money in Q3 — $59 million according to DappRadar. Most of this revenue — $33 million — went to Uniswap.