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The cryptocurrency industry now accounts for 2% of the global money supply, with DeFi and stablecoin rise indicating rapid growth in acceptance.
This year decentralized finance (DeFi) has proven to be a transformative sector for the cryptocurrency ecosystem and it is also making waves in among global financial markets as institutional investors become entranced with the potential to earn high yields on stablecoins, altcoins and Bitcoin.
Though Dogecoin (DOGE) has dominated the news in recent weeks, Delphi Digital has been tracking the development of the DeFi ecosystem on the Ethereum (ETH) network, which has been slowly gaining momentum over the past month.
According to Delphi Digital researchers, though Ethereum-based DeFi networks saw the most development, protocols from other top ecosystems such as Ethereum, BSC, Solana (SOL), Avalanche (AVAX), Polygon (MATIC), and Terra (LUNA) have begun to gain momentum and now account for 34% of the total value locked in DeFi.
The BSC ecosystem is the second-fastest developing DeFi ecosystem after Ethereum, due in part to its association with the Binance ecosystem, which has vast resources to help its native protocols get off to a good start.
The top three DeFi protocols on the BSC are Venus (XVS), PancakeSwap (CAKE), and PancakeBunny (BUNNY), with a cumulative amount locked on the network of $49.1 billion.
Collectively, all layer-1 ecosystems have now surpassed $130 billion in cumulative total value locked (TVL).
Stablecoins form the foundation
Delphi Digital claims that DeFi native stablecoins have played a significant role in the ecosystem’s development, accounting for approximately $10 billion of the overall market cap.
Dai’s (DAI) circulating supply recently reached $4 billion, establishing it as the largest DeFi stablecoin, while UST is a steadily growing Terra ecosystem challenger.
From a broader business viewpoint, the increasing circulating availability of the top stablecoin ventures (USDT and USDC) has helped to raise the appeal of the crypto industry as a whole by making it easier for new funds to reach the market.
Delphi Digital uses the global M2 money supply, the broadest concept of the money supply, to illustrate the importance of the cryptocurrency ecosystem’s development.
Because of gains achieved around the blockchain industry since mid-2020, the crypto sector’s combined market size is now more than 2% of the global M2 money supply, with Bitcoin (BTC) responsible for 1%. The balance of the crypto industry accounts for about 1.2 percent of the global money supply.
As signals of accelerated cryptocurrency acceptance emerge on a near-daily basis, such as the May 6 announcement that Goldman Sachs has opened a crypto trading desk, the amount of funds trapped in DeFi is expected to grow in tandem with crypto’s share of the global money supply.