September 1, 2023
Web3
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0xScope

Web3 Hot Trends: Lido Wins as ETH Liquid Staking Heats Up

Web3 Hot Trends is 0xScope’s weekly recap highlighting the most notable recent developments and potential alpha opportunities in Web3. Powered by 0xScope’s analytical tools and research team.

Over this past week, the Web3 ecosystem saw a notable growth in TVL across many ecosystems and projects, mainly driven by the rise in popularity of ETH liquid staking projects and the continued momentum of BASE’s new projects, among other catalysts. Here are the highlights from an overall bullish week for crypto.

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 the TVL growth data from 25th August to 1st September:

  1. ETH powers 94% of Total TVL Growth. The Ethereum ecosystem recorded $904M in additional TVL this past week, as many ETH liquid staking projects recorded healthy growth and the overall crypto market recovered from last week’s $3.6B decline. The main contributor to the ecosystem’s rebound is the rise in TVLs for ETH staking products, with market leader Lido adding $700 million of TVL. More on that later.

  1. BASE Records Double-Digit TVL Growth. Several other ecosystems aided in the overall market’s TVL recovery, with BASE maintaining its momentum a few weeks after its launch in early August, with a 10.48% TVL increase this week. Later, we discuss which projects helped keep the platform growing.

  1. Starknet TVL Rises 13.61% Amid Network Milestone. Starknet, a Layer-2 Ethereum solution that uses the Kakarot virtual machine and Cairo programming language, recently claimed that it is the first Ethereum L2 platform to record more than 100 transactions per second. The platform credited this performance to its “Quantum Leap” upgrade revealed in July. However, Starknet faced some controversy this week after some of its users were unable to access $550,000 worth of funds from wallets that were rendered obsolete by the upgrade. The project has since decided to reverse this fund lockout.

Ecosystem TVL Growth (25th August — 1st September 2023)

full list

Project TVL Growth

Diving deeper into the projects’ TVL growth, the 0xScope team spotted positive trends from a handful of projects that mostly contributed to this week’s overall Web3 TVL recovery.

  1. Lido’s $700M TVL Rise. Lido, an liquid staking platform on Ethereum, led this week’s rankings with a 5.07% growth that helped maintain its lead as largest DeFi protocol by TVL. According to data from 0xScope, Lido posted a single-day TVL increase worth $1B between August 28 and 29, becoming the key factor in ETH’s TVL rise this week. In addition, the platform recently revealed that its market share of the total staked ETH supply reached 22.05%.

2. ETH Staking Competition Heats Up. Aside from Lido, several other ETH staking products have grown their TVLs as well. Binance Staked ETH, logged a whopping 188.13% TVL increase worth $121.58M to take the №5 spot in the rankings. Meanwhile, Coinbase Wrapped ETH, Rocket Pool, and Frax ETH added $92.67M, $70.63M, and $16.9M to their TVLs respectively. Meanwhile, amid the bullish ETH staking market and the ongoing decentralization concerns presented by these products, some providers such as Rocket Pool and StakeWise have promised to refrain from owning more than 22% market share in the market. (Market-leading Lido refused to make a similar commitment back in June.)

3. Uniswap on BASE Grows 190%. Popular DEX Uniswap posted a $12.40M increase in TVL, which translated to almost 2x growth this week. Two more BASE projects more than doubled their TVLs: Overnight Finance at +159.75% and Moonwell at +121.21%. The rise in TVL across these three projects helped offset the loss of momentum for Web3 social networking platform Friend.tech, which recorded a 95% drop in transactions this week following its viral growth earlier this month.

Project TVL Growth (25th August — 1st September 2023)

full list

Project User Growth

Project user growth can offer insights into the adaptability and popularity of specific projects. Here are some emerging trends from projects that have grown their user base the most during the past week:

  1. Airdrop Hunters Fuel User Growth. This week, the top nine projects by user growth are either bridges, bridge aggregators, token swap platforms, or swap aggregators. Bungee added 8,209 new users, taking the №1 spot in the rankings, while second-place Stargate added 7,688. The dominance of token bridge and swap projects this week is an indication that airdrop hunters contribute most of the activity in those platforms. The rest of the list are composed of projects that deal with liquid staking derivatives, collateralized debt positions, and NFTs.

  1. Uniswap V2 on Ethereum is Likely Full of Bots. Based on 0xScope data, new users across the projects on this week’s list use an average of 3.57 addresses. One notable outlier is Uniswap V2 on Ethereum, whose address-per-new user ratio reached 17.81. According to our analysis, a high number for this ratio is likely a sign of bot activity dominating the project.

Project User Growth (19th-25th August 2023)

full list

The past week’s crypto trends show a more bullish outlook based on the rise in activity for ETH staking projects (and the subsequent heated competition), with more contributions from platforms such as BASE, Starknet, and others. On a user growth level, airdrops and bot-related activities still drive new usage for weeks like these.

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.

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