a16z: DeFi Continues to Grow Despite Recent Challenges as Overall Crypto Usage Hits Record Levels

The decentralized finance ecosystem continues to grow despite recent challenges as overall crypto usage hits record levels, venture capital firm Andreessen Horowitz (a16z) said in a new report.

Andreessen Horowitz (a16z) has released a new report on the state of the crypto industry, highlighting the growth of decentralized finance (DeFi) and stablecoins.

According to the report, overall crypto usage hit record levels in 2024, with 220 million addresses interacting with protocols across the blockchain ecosystem in September — more than triple the figures recorded in late 2023.

Solana (SOL) saw a massive spike in activity, boasting 100 million active addresses on the network. Other networks that registered a significant increase include Near Protocol (NEAR), Coinbase's layer-2 network Base, Tron (TRX), and Bitcoin (BTC).

The report also noted the growth of stablecoins, which have become one of the top 20 holders of U.S. Treasury securities, according to a Coinbase report.

Stablecoin usage also saw marked growth in Q3, 2024, with major players being Tether's USDT and Circle's USDC.

As well as highlighting several growth metrics, the report also pointed out several key issues surrounding the crypto industry since a16z's first State of Crypto report in 2023.

One major takeaway is that crypto has become a significant political issue amid the U.S. election, with candidates being quizzed on their stance towards digital assets.

However, the United States still lags behind the European Union and the United Kingdom in terms of public engagement regarding crypto regulation.

The report also noted that infrastructure improvements and the increasing intersection of blockchain technology and artificial intelligence have further bolstered the industry's growth.

DeFi has been one of the areas of crypto that saw the most usage across daily active addresses in the past year, according to the report.

“Since DeFi’s arrival in the summer of 2020, decentralized exchanges, or DEXs, have grown to account for 10% of spot crypto trading activity — all of which occurred on centralized exchanges just four years ago,” the report reads.

DeFi protocols across the ecosystem now hold over $169 billion in total value locked (TVL), with the top platforms being Lido, Aave, Uniswap, EigenLayer, WBTC, and ether.fi.

These decentralized platforms continue to attract users as traditional financial institutions, such as U.S. banks, face ongoing challenges.

According to a16z, the top blockchains in terms of builder activity or interest include Ethereum (ETH), Solana, and Bitcoin.

While Ethereum still attracts the most developer activity, with 20.8% of builders, Solana has seen significant growth in this sector, increasing from 5.1% in 2023 to 11.2% in 2024.

Base also recorded a notable jump in developer activity, rising from 7.8% to 10.7% year-over-year. Bitcoin, which has registered a surge in DeFi-related activity, saw an increase in builder interest from 2.6% to 4.2%.