DeFi Thrives Amid Crypto Surge, Says a16z Report

The decentralized finance landscape is expanding despite recent obstacles, with overall cryptocurrency utilization reaching unprecedented levels, according to a fresh report from venture capital firm Andreessen Horowitz (a16z).

In its “State of Crypto” report released on Oct. 16, a16z observed a significant increase in crypto activity over the past year, noting that this expansion is “similar to the early stages of internet adoption.”

For example, September 2024 recorded 220 million addresses engaging with protocols across the blockchain landscape—more than three times the number reported in late 2023. Approximately 100 million of these active addresses were associated with Solana (SOL), a blockchain network that has experienced remarkable growth in engagement.

In addition to Solana, other networks that have seen substantial growth in active addresses include Near Protocol (NEAR), Base (Coinbase’s layer-2 network), Tron (TRX), and Bitcoin (BTC).

Regulations Surrounding Stablecoins and Crypto

The report also outlined various growth metrics and critical issues influencing the cryptocurrency sector since a16z’s inaugural State of Crypto report in 2023.

A key observation is that cryptocurrency has emerged as an important political topic amid the U.S. elections. However, the U.S. is falling behind the European Union and the United Kingdom in terms of public discourse on crypto regulations.

The market has also experienced significant developments related to stablecoins, focusing on their regulatory framework and use. Notably, stablecoins have climbed into the ranks as one of the top 20 holders of U.S. Treasury securities, with a Coinbase report indicating substantial growth in Q3, 2024. Leading players include Tether’s USDT and Circle’s USDC.

Moreover, enhancements in infrastructure and the growing convergence of blockchain technology with artificial intelligence have further fueled the industry’s expansion.

The Continued Rise of DeFi

Decentralized finance (DeFi) has emerged as one of the most actively used sectors in cryptocurrency over the past year.

“Since the introduction of DeFi in the summer of 2020, decentralized exchanges, or DEXs, now represent 10% of spot crypto trading activities—previously, all of this occurred on centralized exchanges just four years ago,” the report states.

DeFi protocols across the ecosystem currently hold over $169 billion in total value locked. Leading platforms include Lido, Aave, Uniswap, EigenLayer, WBTC, and ether.fi. These decentralized solutions continue to draw users as traditional financial institutions, particularly U.S. banks, grapple with persistent challenges.

According to a16z, the top blockchains by developer activity and interest include Ethereum (ETH), Solana, and Bitcoin.

While Ethereum remains the leader in developer engagement with 20.8% of builders, Solana has experienced notable growth in this regard, rising from 5.1% in 2023 to 11.2% in 2024.

Base also showed significant increases in developer activity, jumping from 7.8% to 10.7% year-over-year. Bitcoin, which has witnessed a rise in DeFi-related engagement, recorded an uptick in developer interest from 2.6% to 4.2%.