Key Insights of Leading Projects in Various DeFi Sectors: Overall Oligopolistic Structure
The core of DeFi is to provide more innovative and efficient systems that address the inefficiencies of TradFi through validated PMF (Product-Market Fit).Author: Cheeezzyyyy
Compiled by: Felix, PANews
Since the onset of the "DeFi Summer" in 2021, DeFi has made significant progress. Today, DeFi has established multiple mature sectors, with growth and activity in each sector becoming self-sustaining.
Even so, its development is still in the early stages, as the cryptocurrency market capitalization is still around $3.3 trillion, while the TradFi market capitalization stands at $133 trillion.
At the core of DeFi is the provision of more innovative and efficient systems that address the inefficiencies of TradFi through validated PMF (Product-Market Fit). DeFi is also composed of several key sectors, which typically follow an oligopolistic structure.
In Q4 2024, the DEX platform Raydium (an automated market maker based on Solana) captured about 61% of the market share, surpassing Uniswap to become the industry leader. Notably, Raydium's TVL is only about 39% of Uniswap's.
Although Raydium's rise may be attributed to the Memecoin Season within the Solana ecosystem, its LT (Note: user lifecycle, measuring user activity) sustainability remains uncertain.
Winners in the perp DEX sector are quite prominent. Hyperliquid's dominance has been further solidified since Q3 2024, with its market share increasing from 24% to 73% (a threefold increase).
Since Q4 2024, the overall trading volume of perp DEX has been on the rise, currently averaging about $8 billion per day, compared to only $4 billion at that time.
Hyperliquid continues to challenge CEX for its position as a price discovery platform.
Since 2024, Aave's dominance in the lending sector has increased:
- Deposits: 42.1% to 65.78%
- Borrowing: 31% to 61%
Even though Aave does not offer the most attractive yields, its long-standing reputation and user trust in the protocol make Aave the preferred choice in the lending space.
In the yield sector, the leader Pendle is driving development, with a market share exceeding 50%. Its unique value proposition lies in being the preferred driver for discovering industry value. Despite the overall slowdown in the DeFi market and low market sentiment, Pendle still maintains a record TVL.
In terms of TVL, liquid staking (LST) is currently the largest sector in DeFi, with approximately $35 billion.
Lido Finance is the undisputed leader, holding about 70% market share and nearly monopolizing the LST sector, with a TVL of $24.8 billion, which is 5.17 times that of its competitor Binance bETH ($4.8 billion).
This dominance is not driven by staking yields but by the asset value of stETH:
- Best asset utilization: The most integrated asset in DeFi
- Most trusted service: The preferred institutional-grade staking solution for funds and entities
Credibility and trust are key to adoption.
As for liquidity re-staking, the market trend is generally similar. Notably, ether.fi's market share has risen from 35.3% to 63%. Even though ether.fi saw a decline in staking volume in S1 and S2, its TVL still grew by about 770% in 2024.
This growth is driven by:
- First-mover advantage in the ecosystem
- Extensive DeFi integration
- Trust in the product suite
Lombard's performance in the BTC-Fi sector closely mirrors trends in the LST/LRT sector, with market share steadily rising to 49.5%.
As Babylon matures, the demand for BTC as a primary safe asset will grow exponentially, bringing a $2 trillion market opportunity.
Since LBTC is the most integrated, widely used, and security-focused LRT in DeFi, Lombard is set to become a primary asset trusted by institutions and widely adopted, similar to stETH. Lombard will occupy a dominant position in the industry.
In summary, various DeFi sectors have clearly found their PMF, forming a complementary overall ecosystem. This marks the rise of new primitive sets that disrupt CeFi.
As DeFi enters the next phase of expansion, we will see more new verticals introducing untapped markets and even integrating into CeFi:
- Ethena Labs: Plans to integrate TradFi payments
- Mantle: Mantle Index Fund and Mantle Banking will integrate cryptocurrency with TradFi
With increasing institutional interest in DeFi, such as BlackRock's participation in DeFi through BUIDL, WLFI's DeFi portfolio, and spot ETFs, the future development of DeFi looks promising.
