Sustainable Ecosystem Building Trumps Trading Volumes in DeFi Any Day. Here’s Why! - Coincu

It is no secret that the global DeFi ecosystem has witnessed the rise and fall of numerous prominent projects over the last couple of years. These offerings, that once commanded billions in TVL (total value locked), seem to vanish almost overnight, leaving investors and users with little more than cautionary tales.

For instance, Iron Finances collapse back in June 2021 has often been brought up as a stark reminder of this, with its native token plummeting to near zero in a case of skewed liquidity wiping out approximately $2 billion in value. Similarly, in Q3 2024, Algofi, the largest DeFi protocol on the Algorand blockchain, announced its shutdown, citing a “confluence of events” that made continued operations unfeasible.

Despite commanding massive trading volumes — undoubtedly a crucial aspect of any DeFi protocols general health — these protocols failed to expand in a manner that was sustainable and viable in the long run. And, while their high transaction counts and values certainly indicated high consumer interest, they revealed little info about their user retention capacities, protocol health, or long-term viability.

In this broader context, experts now believe that the true measure of a platforms strength lies not in how much money moves through its smart contracts on a given day, but rather in their backing ecosystem (i.e. partners, developers, and loyal users).

Exploring DeFis evolution beyond siloed services

Since the markets inception nearly half a decade ago, DeFi has evolved significantly from its early days when platforms typically offered single, specialized services. Today, most projects have developed comprehensive ecosystems that provide users with seamless access to diverse financial tools and services — be it for trading, earning, borrowing, or even participating in governance without having to navigate between disconnected protocols.

Amidst the fray, THENA has distinguished itself as a forerunner when it comes to all of this, focusing on ecosystem development rather than chasing trading volumes alone. Launched in early 2023 atop the BNB Chain, THENA was initially viewed as the “liquidity layer” for the BNB ecosystem.

However, rather than pursuing growth at all costs, the project has methodically built up a comprehensive suite of services designed to address inefficiencies plaguing several decentralized exchanges (DEXs) today. It does so by aligning incentives among liquidity providers, token holders, and partner projects while simultaneously offering several novel tools.

To this point, THENA comes replete with a spot DEX for asset swaps and passive income generation, a module called ALPHA for perpetual trading with leverage up to 60x across more than 270 crypto pairs, and ARENA, a social platform offering gamified trading competitions.

In addition to this, THENA‘s community-first approach is evident in its tokenomics and governance structure, with the platform’s to-date revenue of $33 million having been distributed directly to token holders through its ‘veTHE’ system. Not only that, since its debut, the platform has facilitated integrations with over 50 partners.

Lastly, it bears mentioning that THENA offers unprecedented customization options for projects seeking liquidity solutions, including different AMM models, automated liquidity managers, and flexible incentive structures — allowing it to serve various token types from stablecoins and liquid staking tokens to memecoins and tokenized real-world assets (RWAs).

Sustainable growth is the only way

With the DeFi market continuing to mature — as showcased by the industrys total cap reaching $130 billion late last year — the distinction between sustainable platforms and short-lived experiments stands to only become increasingly apparent from here on out.

In fact, many argue that projects focused solely on incentivizing trading volume through unsustainable token emissions or yield farming opportunities will likely struggle to maintain relevance, while those building comprehensive ecosystems with genuine utility will be positioned for long-term success.

Therefore, looking ahead, projects striking a delicate balance between innovation and sustainability will most likely forge a lasting impact on the market, creating interconnected systems where partners and users alike find continuous value in participation. Interesting times ahead!