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DeFi Ecosystem: Categories by Market Share

4.8 | by Lim Yu Qian

Top 3 DeFi Categories, by Market Share (2023)

The 3 biggest decentralized finance (DeFi) categories in 2023 are:

In total, the top 3 categories make up 70.7%, or the majority of the DeFi ecosystem.

DEXs and oracles have long been key pillars of the DeFi ecosystem, and have maintained their respective leading positions since at least the start of 2021. However, as other DeFi categories have developed and gained traction in the crypto industry, the market share for both DEXs and oracles has gradually declined over the past two years.

The DEX token category initially dominated the DeFi ecosystem with a 50.1% market share in 2021 Q1. DEXs began to lose their dominance in DeFi during 2022, but recorded the largest quarterly decrease in market share of 5.7 percentage points in 2023 Q1. This was despite a 44.3% increase in market cap, as DEXs were outpaced by growth in other categories. 

Similarly, oracles had originally held a 19.0% market share of DeFi in 2021 Q1. Oracles had slipped to 3rd place from 2021 Q4 to 2022 Q1, after being overtaken by the lending category, but had regained market share in subsequent quarters. Even so, the oracle category saw a 2.8 percentage point quarterly decrease in 2023 Q1.

On the other hand, the liquid staking category had only emerged in 2022 Q3, when it became a meaningful part of the DeFi sector amid Ethereum’s upgrades to Proof of Stake. Liquid staking governance tokens had immediately captured 6.3% of the DeFi ecosystem market share and was the 5th biggest DeFi category that quarter. 

The liquid staking category almost doubled its market share in 2023 Q1, gaining 6.6 percentage points to capture 14.2% of the DeFi ecosystem. As a result, liquid staking overtook the lending category, which had an 11.4% market share after shrinking by 1.1 percentage points.

Fastest Growing DeFi Categories

In addition to liquid staking, the derivatives and insurance categories have been the fastest growing DeFi categories, in terms of market share gains. Fixed interest, although a much smaller DeFi category, also managed to increase its market share in the last quarter. The growth in derivatives, insurance and fixed interest is likely driven by the environment of uncertainty, as the crypto community looks to protect their assets and hedge against volatility.

Derivatives have become an increasingly important DeFi pillar, making up 10.8% of the ecosystem. The market share of the derivatives category had increased by 2.9 percentage points in Q1 this year, marking two consecutive quarters of rising dominance. This came after its mixed performance from 2021 to 2022, when the market share of derivatives had fluctuated between 6.1% to 8.2%.

The insurance category had a more modest gain of 0.5 percentage points in Q1 this year, to reach a market share of 2.3%. While insurance has historically been a smaller part of the DeFi sector, the highly damaging collapses of Terra Luna and FTX last year might mark a turning point in the category’s popularity.

Fixed interest also only made a minor gain of 0.1 percentage points, to make up 0.4% of the DeFi ecosystem. The fixed interest category continues to be the smallest, but has held onto a stable share of the market. In comparison, the market share of yield aggregators and asset management has fluctuated more widely throughout the quarters, suggesting that these categories are especially dependent on DeFi trends or crypto narratives.

What are the Major Categories in DeFi?

There are currently 9 major categories in the crypto DeFi ecosystem: DEXs, oracles, liquid staking, lending, derivatives, yield aggregators, insurance, asset management and fixed interest. Besides these governance and utility tokens, other crypto assets that are used in the DeFi sector include stablecoins and wrapped assets.

Methodology

The study examined the market share of the 9 major decentralized finance (DeFi) categories, based on the tokens’ combined market capitalization from CoinGecko. Only governance and utility tokens were included here, while stablecoins and wrapped tokens were considered separately.


If you use these insights, we would appreciate a link credit to this article on CoinGecko. A link credit allows us to keep supplying you with future data-led content that you may find useful.

Curious to know more about the state of crypto in the first quarter of 2023? Check out our comprehensive 2023 Q1 Crypto Industry Report, that extensively covers everything from the crypto market landscape to analyzing Bitcoin and Ethereum, DeFi and NFT ecosystems, and more!

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Lim Yu Qian
Lim Yu Qian

Yuqian is a cryptocurrency writer and marketer who specializes in mainstream cryptocurrency insights. She's especially fascinated by the philosophical and socioeconomic aspects of crypto and also goes by the name of Q. She holds a Bachelor of Social Sciences with Honors from the National University of Singapore. Follow the author on Twitter @solosbrqt

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