The decentralized finance (DeFi) ecosystem continues to expand despite recent challenges, as overall cryptocurrency usage reaches record levels, according to a new report from venture capital firm Andreessen Horowitz (a16z).

Crypto Industry Growth

In its “State of Crypto” report published on October 16, a16z highlighted a significant increase in activity within the crypto industry over the past year. The growth trajectory for the industry is described as “reminiscent of early internet adoption.”

For example, September 2024 saw 220 million addresses interact with protocols across the blockchain ecosystem—more than triple the figures recorded in late 2023. Notably, around 100 million of these active addresses were on Solana, a blockchain network experiencing a substantial rise in activity.

Other networks also witnessing a significant increase in active addresses include Near Protocol, Coinbase’s layer-2 network Base, Tron, and Bitcoin.

Key Metrics and Issues

The report also highlighted several growth metrics and key issues affecting the crypto industry since a16z’s first State of Crypto report in 2023.

One major takeaway is that cryptocurrency has become a significant political issue amid the U.S. election. However, the United States lags behind the European Union and the United Kingdom in public engagement regarding crypto regulation.

The market has also seen substantial developments around stablecoins, including their regulation and usage. Notably, stablecoins have grown to become one of the top 20 holders of U.S. Treasury securities, with marked growth in Q3 2024. Major players include Tether’s USDT and Circle’s USDC.

Additionally, infrastructure improvements and the increasing intersection of blockchain technology and artificial intelligence have further bolstered the industry’s growth.

DeFi Sector Expansion

DeFi has been one of the areas within crypto experiencing the highest usage across daily active addresses in the past year.

“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 account for over $169 billion in total value locked. Top platforms include 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.

Builder Activity in Top Blockchains

According to a16z, top blockchains in terms of builder activity or interest include Ethereum, 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 seen a surge in DeFi-related activity, experienced an increase in builder interest from 2.6% to 4.2%.

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