a16z report highlights DeFi growth as crypto activity surges

The decentralised finance (DeFi) sector continues to thrive, even as the overall crypto industry experiences record growth, according to a new report by venture capital firm Andreessen Horowitz (a16z). 

The "State of Crypto" report, released on October 16, highlighted a substantial increase in crypto activity, likening the industry's growth to the early days of internet adoption.

The report noted that in September 2024, 220 million addresses were actively engaging with blockchain protocols, showing a significant rise from late 2023. 

Around 100 million of these active addresses were on Solana, which has seen a surge in usage. 

Other networks, such as Near Protocol (CRYPTO:NEAR), Base (Coinbase's layer-2 network), Tron (CRYPTO:TRX), and Bitcoin (CRYPTO:BTC), also recorded significant growth in active addresses.

The report emphasised that crypto is emerging as a major political topic, particularly during the U.S. election season. 

Despite this, the U.S. still lags behind the European Union and the United Kingdom in terms of public engagement and regulatory developments concerning digital assets. 

The report also addressed the growth of stablecoins, which have become one of the top 20 holders of U.S. Treasury securities. 

Major stablecoins like Tether’s USDT (CRYPTO:USDT) and Circle’s USDC (CRYPTO:USDC) have seen marked growth, underscoring their increasing role in the broader financial ecosystem.

DeFi has been a key driver of crypto adoption. 

The report noted that since the sector's rise in the summer of 2020, decentralised exchanges (DEXs) now account for 10% of the spot crypto trading activity, a market previously dominated by centralised exchanges. 

DeFi protocols collectively hold over $169 billion in total value locked (TVL), with platforms like Lido (CRYPTO:LDO), Aave (CRYPTO:AAVE), Uniswap (CRYPTO:UNI), and EigenLayer (CRYPTO:EIGEN) continuing to attract users seeking alternatives to traditional financial institutions.

The report also highlighted developer interest, with Ethereum (CRYPTO:ETH) leading in builder activity at 20.8%. 

However, Solana (CRYPTO:SOL) has shown impressive growth, rising from 5.1% in 2023 to 11.2% in 2024. 

Base, another key player, increased its developer activity share from 7.8% to 10.7%. 

Even Bitcoin, traditionally viewed as a store of value, showed a rise in DeFi-related builder activity, increasing from 2.6% to 4.2%.