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Web3 DeFi Tools

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DeFiLlama.com Analytics

Unlocking DeFiLlama Crypto On-Chain Analytics

In this lesson, we explore the remarkable analytical platform, DeFiLlama, which serves as a vital resource for anyone interested in decentralized finance (DeFi). The emergence of DeFi has transformed the financial landscape by enabling users to engage in peer-to-peer transactions without intermediaries. Understanding how tools like DeFi Llama function is essential for grasping the potential of DeFi, especially when considering investment opportunities in cryptocurrencies and blockchain technology.

DeFiLlama stands out not only for its extensive data but also for being completely free—an inviting aspect for newcomers eager to immerse themselves in the world of cryptocurrencies.

And like the other tools… DeFiLama.com is free to use!

Core Concepts

  1. DeFi (Decentralized Finance)

    •  A sector of finance where services like lending, trading are offered on the blockchain.
    • Crypto: DeFi eliminates intermediaries, allowing users to engage in financial activities directly on blockchain networks.
    • Importance: Understanding DeFi helps you appreciate how decentralized protocols can disrupt traditional finance and create new investment opportunities.
  2. Total Value Locked (TVL)

    • Represents the total capital held within a particular financial entity, tool, or product.
    • Crypto Context: TVL indicates the total value of assets staked or locked in various DeFi protocols, which can serve as a measure of their popularity.
    • Importance: TVL is crucial for assessing the health and traction of DeFi protocols, giving you insights into potential investment opportunities.
  3. Protocols

    • Crypto: Protocols in the crypto space are rules and procedures built on blockchain technology, allowing interaction between users and the DeFi ecosystems.
    • Importance: Familiarizing yourself with different protocols helps you navigate the DeFi landscape and make informed decisions about which platforms to use.
  4. Chain Comparison

    • Crypto: This involves comparing various blockchains in terms of metrics such as TVL, user activity, and transaction costs.
    • Importance: Understanding chain comparison enables you to identify the most promising blockchain networks for investment and innovation.
  5. Liquidity Pools

    • Crypto: Liquidity pools consist of funds locked in smart contracts to facilitate trading on decentralized exchanges (DEXs).
    • Importance: Knowing how liquidity pools operate helps you understand the mechanics of trading in DeFi settings and the risks involved.
  6. Airdrops

    • Crypto: Airdrops refer to the distribution of free tokens or coins to users’ wallets to promote new projects.
    • Importance: Airdrops are an excellent way to gain free tokens, but understanding their implications is critical in the rapidly changing crypto landscape.
  7. Yield Farming

    • Traditional Finance Context: Similar to earning interest on savings or investments through traditional banking.
    • Crypto: It involves using crypto assets in various protocols for the purpose of generating high returns on investment.
    • Importance: Yield farming can maximize your crypto assets, making it essential to grasp its intricacies.

Utilizing DeFi Llama

1. Understanding the Dashboard

  • Accessing the dashboard: The main page provides an overview of all protocols and their TVL across different chains.
  • Identifying high-performing protocols: By viewing metrics, you’ll recognize which protocols are gaining traction and may present investment opportunities.
  • Staying updated: The dashboard also features recent news and updates about various protocols.

2. Evaluating Chain Performance

  • Comparative analysis: Utilize the comparison feature to assess different chains’ TVL.
  • Identifying trends: Look for patterns that indicate which chains or protocols are experiencing increases or decreases in use.
  • Example: If Solana shows a significant uptick in TVL, it might be indicative of a positive trend worth exploring further.

3. Exploring New Protocols

  • Discovering brand-new opportunities: Use the ‘drops’ section to find new protocols with promising functionalities.
  • Understanding categories: Different protocols serve various needs, like restaking or derivatives, so gaining insights here can guide your decisions.

4. Evaluating Risks via Hacks and Exploits

  • Risk assessment: Familiarize yourself with historical hacks affecting various protocols—like the $372 million hack in May—so you stay vigilant.
  • Diversifying options: Knowing which protocols are resilient and diversifying your portfolio can mitigate risk.

5. Insights on Decentralized Exchanges (DEXs)

  • Volume tracking: Monitor volumes on DEXs to gauge their activity. A high trading volume could indicate a reliable platform.
  • Example: Uniswap’s trading volumes can serve as a benchmark to signal if a protocol is losing or gaining interest.

 

Crypto: Understanding Total Value Locked (TVL)

TVL serves as an essential metric connecting traditional finance to DeFi. Where traditional finance evaluates market capitalization, crypto engages with the concept of TVL to measure the health of decentralized platforms. For instance, if a new DeFi protocol captures a significant amount of assets quickly, it may be a sign of credible offerings and community trust.

Examples & Real-World Applications

Charts and Visuals

DeFi Llama presents several charts and graphs, such as TVL trends across various protocols and chains. These visuals can be further enhanced by adding data relevant to emerging protocols or predictive analytics.

Hypothetical Examples:

  • Imagine two lending protocols: Traditional Bank A has a TVL of $500 million, while DeFi Protocol B has $300 million. You could analyze the growth trajectory of Protocol B against its market drivers.
  • In the realm of yield farming, if you deposit $1,000 in a liquidity pool with a 25% annual yield, you can expect substantial returns over time.

Historical Context

DeFi’s rise can be likened to the advent of online banking in the late ’90s—the initial hesitancy from users has rapidly transitioned to trust as they grasp the benefits. Understanding how liquidity pools work can provide a historical context to the potential future of financial products, shifting power from centralized banks to individual users.

Cause and Effect Relationships

Take, for instance, the effect of hacking incidents in crypto. Increased hacks can lead to a general mistrust in certain protocols, causing a drop in their TVL. Conversely, higher investment in security measures might boost user confidence, leading to increased TVL.

Challenges and Solutions

Notable Challenges:

  • Risk of Hacks: The susceptibility of protocols to be hacked remains a leading concern.
  • Market Volatility: Unpredictable price swings can discourage newcomers.

Potential Solutions:

Blockchain technology can offer enhanced security through decentralized systems and built-in transparency measures. Smart contracts can provide users with increased assurance when locking funds in various protocols.

Key Takeaways

  1. Understand Total Value Locked (TVL): It’s crucial for assessing DeFi protocols.
  2. Explore New Protocols: Stay alert for new opportunities that could yield benefits.
  3. Cryptographic Security: Recognize and understand the inherent risks and necessary security measures.
  4. Diversification is Key: Just as in traditional finance, diversified strategies can mitigate risks.
  5. Continuous Learning: The DeFi landscape is ever-evolving, and ongoing education will keep you well-informed.

Discussion Questions and Scenarios

  1. How do you view the role of Total Value Locked (TVL) in measuring the success of a DeFi protocol?
  2. Compare your trust levels between traditional financial institutions and Decentralized Finance platforms.
  3. Consider the impact that security breaches have on user confidence; how might this influence your investment choices?
  4. If a promising new DeFi project has a low TVL, what steps would you take to evaluate its potential?
  5. Discuss how you would assess the relationship between a centralized exchange’s trading volumes and the broader crypto market.
  6. How can understanding historical hacks impact your approach to selecting DeFi protocols?
  7. Are decentralized exchanges more susceptible to volatility than traditional ones? Why or why not?

Glossary

  • DeFi: Decentralized Finance, allowing peer-to-peer financial services without intermediaries.
  • Total Value Locked (TVL): The total value of assets secured in protocols.
  • Protocols: Sets of rules that govern interactions and transactions on blockchains.
  • Liquidity Pools: Funds staked in smart contracts for trading on DEXs.
  • Airdrops: Free distribution of cryptocurrency to users’ wallets to promote new projects.
  • Yield Farming: Act of earning rewards through various DeFi activities using crypto assets.

 

Continue to Next Lesson!

As you absorb the information from this lesson, consider how you can actively participate in the DeFi landscape with tools like DeFi Llama. Your journey through Crypto Is FIRE (CFIRE) continues as you explore the next topic, diving deeper into the innovative world of cryptocurrencies.

 

Read Video Transcript
DeFi Llama: The Ultimate Crypto Analytics Website | Best Tools for DeFi Projects & Investments
https://www.youtube.com/watch?v=rE3JLPncqMk
Transcript:
 welcome back guys crypto for light channel today we’d like to talk about defy llama a quick review  all features on defy llama and why this website basically the best website the best sources for  analysis defy sector let’s dive in  first of all guys you have to know this website absolutely totally for free so all information  you can use totally for free without any subscription, premium plans  or so.
 Literally the best website for DeFi sector analysis with a lot of data.  If you are the fan of analytics, if you are the fan of DeFi, this website can be like  a rabbit hole because you can spend here even a whole day you know compare the data and analyze  the metrics i already made a video about how to use the total value locket tvl to market cap how  you can compare this to data how this data can help you to determine the potential price movement  on the main page of defile lama you’re gonna see the dashboard and the first one is a defy overview in overview you can find out that all protocols
 total value locket here is by chains here’s uh how the tour wallet locket looks like on a graph  protocols uh in different chains and when you open a protocol you can track everything about a little  also in just basic information you can find out even the latest news about the Alito.  Next tool is the chains.
 I already told you about this one, how you can compare the chains TVL.  Here you can find out on Ethereum, we got like over than 1,000 protocols, different protocols.  You can open the Ethereum, for example, and find out all protocols Ethereum chain.  Also, you can choose by chains  this one in the filter. Bridget TVL for all chains.
 So in Polygon we can see the total Bridget  around 4.5 billion. Next one is compare the chains. Basically when you add some chains  for example Solana let’s add Optimism, Arbitrum, Solana let’s add it optimism arbitrum solana let’s add a base  you can find out the activity and basically the trend so tvl locket in seoul and we sold the hype  around the meme coins on seoul so basically the more people start using their chains  soul chain and it means the tokens on this chain also will mostly pump it so like you can see the  optimism tvl is much lower and we don’t see the hype around the optimism maybe in the future we
 will see the shift between the chains like it was here song 22 when we got a dump uh on FTX right as soul so soul dump it optimism hype it our beat room hype it chain hybrid but  then so recover back and over perform their beat room so that’s the case how you can compare the  chains and also when you add the chains you can take a look the total wallet locket and chain you  can take a look there fees the active addresses next one is a drops here you can find out uh their brand new protocols  here’s the chains of these protocols here’s a category what are this category maybe
 you believe in the restaking so you think that restaking is going to be the next trend  so you have to pay attention for restaking category this is a tvl which might lock it so  uh you remember the agent layer it was a restaking  so TVL it’s pretty pretty huge right so listed at year ago and uh total money raises 150 million so  basically uh your main goal is to find out the brand new protocols which just the least said  you know with pretty pretty small tvls and maybe they will get some activities uh for potential a drop right so maybe they gotta like test nets or some uh task in
 galaxy so you can participate and track different racing rounds this is how you can dive in into  potential a drops treasuries oracles this one so total wallet secured all oracles you can see the chain link in the top  total value lock at all forks and here you can find out the top is of with 3.
4 billions and you  can compare the two protocols between each other right and you can see the hype around these  protocols so this take a look the hype of maker MakerDAO was in top in November 2021,  but then a little overperformed MakerDAO. And we can find out which category now is pumped,  is hyped around. So for example, here was DEXs.
 Here, the hype of DEXs was exactly in December  2021. You remember the price of DIVO dvdx right but then the hype around the  dax is going down uh we can for example choose the derivative once again liquid staking let’s say  uh real world assets this one was good and find out over here nobody cared about the real world sector here in april song with one because  they didn’t even exist this one and i think the real world asset sector will overperform  all protocols so take a look at the interest to a real world asset sector can can grow significant
 because take a look even in february some 23 it was like only less than 1 billion 871 million  now in may 24 it was 4.4 billion so yes i think the real world sector will overperform the many  many other categories next one is recently listed protocols and we can rank also by category  so for example if you believe in social phi here time for fun right social fight if you believe in  this sector if you believe in this protocol maybe the social fight gonna be the next uh trend right  maybe the everybody start using the social fight and maybe exactly this protocol gonna be the leader
 one or maybe you can scroll down and find out that just a brand new uh real world asset uh protocol  the next category is just the languages so the smart contract languages which one is most popular  basically it’s uh always solidity next in yields you can track the pools uh delta neutral example collateral talking for example we can use the  solana this one it’s give you the uh strategy epi this available tokens ltv delta uh long short  strats a leveraged landing a stable coin pools default lama got a aggregator of aggregators so
 you can connect your wallet and swap talk inside a defile llama next page is  everything what about nft so if you’re an nft fan you can track the collections here the floor  prices how it changes volume volume on seven days total supply you can compare the marketplaces  earnings from nfts next page is unlocks here you can track the upcoming unlocks for example we got  an optimism Optimist Foundation now this is grand prize a market cap discrimometer here’s unlock it  in percentage so 40 only unlock it here’s the maximum tokens which should be unlocked and
 here’s a daily unlocks and we can find out so in the next six days nine hours and three minutes we will see the upcoming unlock uh with 57 million  borrow aggregator so i can borrow the bnb and use the bitcoin like cultural on other centralized  exchanges transparency so basically you can track all main uh centralized exchanges crypto  centralized exchanges and track the assets,  proof of reserve, right? This is a clean assets, 24-hour inflow or outflow.
 So we can see,  for example, from Binance, in one month, we saw like half a billion money outflow. In one month,  we saw like 9 million inflow. But of course, you can’t make your own decision right just based on inflow or outflow  because uh sometimes the people just send money send some coins to centralized exchanges right  sell them and just distribute to two different wallets so it doesn’t mean it’s some something  bad with the centralized exchanges right so everything okay but you can track this data also and next one
 is the bridges and take a look this is a bridge bridge volume in all bridges you can track the  total volume 24 hour 24 seven days and total volume in one month if you need to bridge some  tokens for example you can choose any bridge let’s say this one on Stargate you can bridge the tokens between these chains next one is  the volumes on decentralized exchanges and in the chains so for it’s really important because uh for  example you can see on uniswap in the dexes we’ve got a pretty huge volume over then around 1 billion
 24 hour volume trades so it’s literally good right and volume in seven days is 12 billion so we understand it’s  more than okay to trade swap tokens on uniswap but if you find out the volume of some DAX  crash it down maybe something happened with this DAX and maybe it’s not safe to connect even a  wallet to this DAX next one is aggregators so you can track the all main aggregators for swaps for example one inch  jupiter uh jupiter is hyper because it’s on soul and here’s how the volume changes on this dex
 remember the hype around the d8x and yes i i still believe in d8x but take a look the  scene future is now on top in top with a 657 million volume and DYX only on  fifth rank with 268 volume. It’s a big difference even the brand new hyperliquid now overperformed  the DYX. No hate to DYX but guys marketing is not always a main driver for success.
 Next  one is the perps by chains. So like you can see on perps mostly the people use  the arbitrum next one is a perp aggregator and this one options and options by chains next one  you can track the fees and revenue races and here is a total funding rounds was uh 5 300 funny rounds with total  funding amount so imagine all the same period on the funding rounds the funds big investors  invest over than 101 billion right money into this one and take a look uh basically exactly around  the bottom uh we saw how funds invested the biggest amount of
 money into their uh projects how it can help you first of all you can check by uh chains  for example you interested in some uh brand new projects on arbitrum so you can  press clear and choose only a bit and and find out the brand new projects.  So for example, this one Particle Network, three days ago, raised 15 million in  series A round.
 This is the description of what this project is about.  Lead investor, a link for this one and other investors.  Imagine the people stake, the people use all these platforms, use these protocols.  And in general, basically we can see the hacks started, the main hacks started from Zone 20, right?  So in four years, yes, we can call it like in four years, totally was hacked at like 8.2 billion, the real money.
 So the hackers stole this money.  Just in May, we got like 372 million  Hackett from protocols from uh platforms so it’s weird it’s weird so people use their brand new  DeFi sector platforms they trust their money and hate their banking system but they trust just a  random website their real funds you know and they they got hacked blame the crypto  guys blame yourself so be careful with the staking we be careful with all protocols with the bridges  you can track the last hacks this one uh for example this was dmm bitcoin so just by end of may
 uh classification like infrastructure problem private k compromising so it’s crazy 305 million stolen  it’s weird it’s weird um take a law also for example this is Gala you remember this story  with Gala made 20 the product of logic classification Infinity mean and dump  so it was pretty weird 22 millions stolen next one is ethereum liquidity staking this one and  the last one is they added brand new uh category like crypto edfs so it’s really really useful for  you if you attract the a bitcoin etf i hope in the future they will add the when they approve the
 ethereum etf we’ll see the even the data about the ethereum here so this is a  blackrock edf you can track the volume you can track the money inflow outflow this one by daily  by weekly by monthly so for example weekly so this was money inflow money outflow so we we will not  see only up only money inflow and by the end of this video you can go and  check the product of defy llama like defy llama notes defy llama news defy llama portfolio so i  recommend you go and check all these tools also so guys i hope you like this video link to defi llama this just brilliant brilliant