DeFi Frog Introduction
Hey Crypto world,
I write this hoping that my story resonates with many of you in the crypto community and that my analysis helps synthesize some of the phenomena occurring around us. I’ve divided the article into sections for your convenience in case you only wish to read the high-level analysis and not the story.
Please feel free to suggest topics worth analyzing as we see DeFi continue to innovate and grow. I encourage you to reach out with your feedback and thoughts on Twitter. You can also find me around the Ren and Aave Telegram/Discords/Forums.
After participating in the ICO boom of 2017 and subsequently getting burned by the crash in early 2018, I, like many of you, went into hibernation during crypto winter, at least on the investing front.
One of my key holdings took off a bit in 2019 which hit me with those excited “could this finally be it?” feelings, but it was quickly squashed. Fast forward to March with the culmination of Covid news resulting in a global market-wide black swan, but interestingly enough, I notice something start to pop up more frequently: “Decentralized Finance”. Not only that, I noticed a couple of my key holdings consistently updating tech progress, and the updates I saw deeply piqued my interest. Commence DeFi Summer.
I fundamentally believe that DeFi will reactivate virtually every ex-crypto enthusiast once they wrap their heads around the implications. It was never only about using Bitcoin as a form of payment but about the building of the banking infrastructure around Bitcoin.
My background is in corporate strategy and innovation consulting, so I knew that my contributions in 2017 were relatively limited to investing/speculation, community lead roles, or founding a business (tried and failed)… Coding is not my strong-suit. With the launch of DeFi, governance, and actual products instead of whitepapers, this means more roles in Business Development, Governance Strategy, and Internal Operations are opening up. Needless to say, I’d love to continue contributing to the ecosystem; if anybody knows of any open roles, please share them with me! I hope this article and my recent threads in Ren and Aave governance give a glimpse of how I think and operate.
First Analysis: DeFi Adoption with a Focus on Ren
As DeFi Summer comes to a close and the excitement of Curve 0xc4ad launch and Uniswap airdrop with the drama of the Sushi Vampire, Bitmex crackdown, and Eminence fallout fades away, many of us are left with the question of… “Where exactly are we? DeFi looks like the future, but will it actually be the future?” It is with this curiosity that I begin this rough, high-level analysis.
A few figures to start:
- 6.5k unique addresses using RenVM
- 250k unique addresses on Uniswap
- 542k unique ETH addresses (Active)
- 40m unique ETH addresses (Holding ETH)
- 100m global crypto users
- 15% American population holding crypto (50m people)
- 4.8b world population with internet access (8b total)
- 1:1 (unique address : person) for simplicity of calculation
- Unique addresses using RenVM is the current market share by user (6.5k)
- Assume Uniswap is the current DeFi SOM (Serviceable Obtainable Market) (250k)
- Assume ETH is the dApps world SAM (Serviceable Available Market) (40m)
- Assume population with any crypto is the TAM (Total Addressable Market) (100m)
- Because this is crypto, I’ll add another circle outside the 3 traditional segments for TM (total market) assuming population with internet access is the TM (4.8b)
Insights & Calculations Using Above Figures
- Ren attained: SOM: 2.6%; SAM: 0.016%; TAM: 0.0065%
- Uniswap attained SAM: 0.625% TAM: 0.25%
- TAM is only 2% of Total Market meaning large potential for overall crypto to grow
- User adoption, TVL, and TAM, SAM, and TM are all growing
- Within DeFi, Ren has just surpassed the 2.5% Innovator threshold with high likelihood of growing acceleration now
- Within the ETH world, Uniswap is only at 0.625%; however, Uniswap trading volume has surpassed that of Coinbase which also bodes well for continued adoption
- Crypto Chico provides great Google trends analysis here around the 4 minute market in his YouTube video
Conclusion and Moving Forward
After observing and participating in conversations at a few money market DeFi companies and analyzing general DeFi and Ren Protocol discussions, my hypothesis is that we are still incredibly early in Ren and DeFi in general for the follow reasons:
- The rough adoption analysis above
- Only a few products have the kind of UX (User Experience) that an average user can easily pick up, and the UX continues to improve
- Gas fees present barriers to entry (awaiting rolls up, ETH 2.0, and further Polkadot maturity)
- Additional blockchains are only just launching their own DeFi ecosystems (DOT, BSC, FTM, NEO)
- Ren has upcoming integrations with Binance Smart Chain, Acala (DOT), Cosmos/Terra, Akropolis to support tokens such as DGB, Doge, DOT, ACA… To take this analysis one step further, one could size the market for every other token and chain that will be integrated. For example, as recently as today, there has been some interest from community members in $XRP
- Many of us DeFi users were awakened from crypto winter by the DeFi boom. As Ren and other interoperability solutions begin to scale, we will spread DeFi innovation and capabilities with our crypto friends that are still in hibernation
- Ren has outstanding proposals/discussions at Aave and MakerDAO for integrations of renBTC and discussions of integrating the powerful native-BTC onramp RenJS which will only accelerate the adoption of RenVM
A Call to Action
I conclude with this to the community. I’m excited as we continue to expand, but I hope that we do not lose sight of the following:
- Focus on user experience. Many of the products are currently still too complex for newcomers to adopt. A few steps further, and we can see massive adoption.
- Foster collaborative and inclusive cultures for all walks of life. Memes are fun, but let’s not alienate people, especially if we want to grow.
- Consider how to best coordinate cross-chain and cross-protocol. I’m starting to see and participate in 3rd party governance, and I think there will be much to gain from a well structured and organized consortium of projects with aligned incentives (For example, Ren Alliance).
Thank you for your time in reading my thoughts, and let’s keep the discussion going! Please don’t hesitate to reach out via Twitter.