DeFi’s profits fell 42% in Q2 even as token prices rose

The DeFi industry could have a big boom this year, but a new report shows that revenues fell despite the huge increase in token prices.

The second quarter report by Bankless, a DeFi-focused newsletter by Mythos Capital founder Ryan Sean Adams, revealed that earnings fell 42% in the second quarter, from $5.5 million in the first quarter to $3.9 million in the second quarter. The findings are somewhat surprising, as most DeFi related tokens have been on the rise recently.

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They blame the decrease in Dai’s savings rate
An important factor was that MakerDAO lowered the stability rate (SF) to 0% after the collapse of the cryptomone currency in mid-March. The Dai Savings Rate (DSR), which was previously 8%, also fell to zero as Maker struggled to keep its dollar in the right place. Dai traded as high as $1.08 during the crisis, so its savings rate was reduced to encourage customers to mint more Dai to sell in the market.

The move caused Maker’s profits to fall from more than $1.2 million in the first quarter to around $150,000 in the second. The DSR never recovered and remains at 0% today according to DeFi’s savings application, Oasis.

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Synethix did not report revenue correctly
Synthetix is another cause of the decline in revenue in the sector, due to the excessive results obtained in the first quarter. The report says that the Australian-based project „was suffering from frontal attacks that reported disproportionate gains for the derivatives protocol“.

The platform corrected the problem and reported about $267,000 in quarterly earnings, which is an order of magnitude less than the $2 million reported for the first quarter.

According to the chart, MakerDAO and Synthetix dominated more than half of all reported DeFi revenue between January and March of this year. The balance changed significantly in the second quarter, with Compound, Kyber, dYdX, and 0x having a much larger share.

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Kyber earned the most revenue during the period, with $634,000 generated in the three months, while Compound came in second place with just under $625,000. The DeFi dYdX platform earned about $624,000 while the 0x protocol generated $445,000 in quarterly revenue for its native token holders, ZRX.

Another notable change in the second quarter was the entry of new participants, including Uniswap V2 which was released in May, Balancer, Ren, Gnosis, and Loopring, all of which had protocol updates, or token releases, during the period.

Despite the decline in Immediate Edge revenue, token performance was impressive, with most tokens outperforming their traditional cryptomone counterparts. DeFi users also increased during the period thanks, in part, to the liquidity furor of yield farming.