Value of Ether (ETH) Locked in DeFi on Course to Pass $1 Billion Soon

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Ether is the “gas” and currency of the Ethereum network. As a testament to the growing use of that network, the USD value of ether locked up in Ethereum-powered decentralized finance applications, or DeFi dApps, crossed an all-time high of $700 million on November 29th.

That milestone has many Ethereum proponents guessing: when $1 billion?

To be sure, crossing the $1 billion mark is an arbitrary threshold, but it is a round, psychological point for stakeholders to gauge Ethereum’s fledgling performance.


Moreover, for the reigning smart contracts platform it represents a watershed moment — validation by tangible, even if relatively modest adoption when Ethereum is rising but still very much so insurgent.

With detractors who have said Ethereum would never get this far and more yet who have never heard of the project at all, seeing $1 billion locked in DeFi shows not only that real utility is at work but that it’s also gaining traction.

The rise toward $1 billion comes after Ethereum’s biggest DeFi dApps have ascended in 2019.

DeFi Has Hit a Stride

For example, the biggest DeFi project to date, Maker, saw its governance votes — facilitated through MKR tokens — take on increased importance this year as Maker’s Dai stablecoin has become more and more of a darling to the Ethereum community. Notably, the Maker team just achieved its biggest milestone yet in activating Multi-Collateral Dai (MCD) earlier this month, a system that, among other things, allows users to draw out Dai loans using collateral beyond just ether.

Another big DeFi riser this year has been Compound, one of Ethereum’s growing stable of composable “money legos” that has in short order become the second most popular DeFi crypto lending service behind Maker. As a possible indicator of Compound’s future prospects, the dApp’s builders raised a $25 million Series A war chest in November that they hope to use to bring the project’s crypto lending services to mainstream users.

Another new DeFi heavyweight has been Synthetix, which has arrived on the scene much more recently than Maker or Compound. Still, Synthetix has glided into something of a “vogue” status this year, recently rising into second place (per “Total Value Locked in USD”) behind Maker on tracker website DeFi Pulse.

Simply put, Synthetix allows users to create “Synths,” or on-chain synthetic assets that are tied to the value of real world assets like stocks, indices, and beyond. And DeFi projects have their risks and rises and falls, Synthetix, like Maker and Compound, might just be here to stay.

The Implications of Rising DeFi

As DeFi is still early, it still has its fair share of disadvantages.

One of those disadvantages might be that DeFi is becoming so important that its biggest dApps could be “kingmakers” in future Ethereum disputes.

That’s according to Leland Lee and Haseeb Qureshi, who outlined in a think piece earlier this month how Ethereum might have become “unforkable” as a result of the growing clout of its biggest DeFi dApps.

As such, the authors argued that major DeFi projects would have to pick one chain over the other amid a political Ethereum dispute, meaning the chain that the biggest DeFi projects choose to back will likely be the main “Ethereum” going forward. As Lee and Qureshi wrote:

“If you imagine the movie version of this saga, the minority chain looks like an abandoned metropolis. Towering buildings sitting empty, alarms going off with nobody to respond, smoke billowing in the distance. There’s no one to even bother rebuilding for.”

Of course, that’s all just a theory for now, but the argument is compelling. Even the prospect of Ethereum being “unforkable” shows that the specter of the platform is growing.

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William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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