Layer by Layer Issue 44: Avalanche, Solana, and Cosmos

Last week, we took a look at some of the recently launched layer 1 (L1) blockchains that have embraced DeFi as an integral part of their growth and development strategies. Particularly for these nascent networks, the provision of basic DeFi tools such as decentralized exchanges (DEXs), lending protocols, derivatives, and cross-chain bridges continues to be a precursor for attracting liquidity and activity on-chain. Even so, DeFi protocols as a whole have suffered from declining usage in recent months.

In June and July, monthly DEX volumes reached lows last visited in August 2021. The past month has been a continuation of this downward trend as well. As of this writing, with just one day remaining in August and $62.7 billion traded thus far, total DEX volume this month is on track to record its lowest point since February 2021. This decline is reflected in DEX liquidity as well, with total value locked (TVL) in Uniswap remaining depressed since reaching a year-to-date (YTD) low in June 2022. At a current value of about $5.67 billion, Uniswap’s TVL is only about 22% higher than its previous low.