Inside the Stellar Ecosystem: Data-Driven Growth Across DeFi Protocols

The Stellar network, long recognized for its emphasis on speedy and low-cost payments, is subtly making its way into an exciting decentralized finance (DeFi) ecosystem.

Through a set of imaginative applications, the Stellar blockchain is witnessing an upsurge in on-chain activity that, to many observers, seems to signal a fresh wave of adoption by developers and users who are actually diversified in use cases. This also seems to signal an emerging ecosystem of sorts.

Although Ethereum and other big chains get most of the publicity, Stellar’s DeFi protocols are asserting themselves in more low-key fashion. They don’t get much in the way of good publicity. Yet, when you take a look at them, and you pull up their statistics, you can see that they’re getting some pretty decent traction. Respectable January volumes have made their way into February.

Liquidity Grows Across Aquarius and Soroswap

Stellar’s two most active platforms that focus on liquidity — Aquarius and Soroswap — are showing that a solid DeFi infrastructure is building on-chain.

Aquarius, which aims to increase the decentralized exchange (DEX) liquidity on Stellar, has seen the total volume of swaps reach the $50 million milestone. With the volume of swaps remaining alive and active on a weekly basis, questions are being asked about whether this liquidity is truly deep and sustainable or just temporary flotsam and jetsam. That said, we will give Aquarius the credit it is due for being quite obviously the local automated market maker (AMM) in the Oasis ecosystem when looking across the total landscape.

Soroswap, meanwhile, is operating as a full-scale liquidity engine. It has recorded more than $21 million in total swap volume, and the protocol is picking up speed. Weekly pool-specific volume reveals a broadening distribution of liquidity, supporting a much wider range of token pairs. Besides, it has not been in the news, and that’s fine. Soroswap’s is a growth story, and what’s important here is that it’s a quiet one.

Aquarius and Soroswap together help build the liquidity needed to support more complex DeFi use cases on Stellar. Their growth points to an emerging DEX economy that’s maturing with time.

Blend and Phoenix Show User Engagement on the Rise

Decentralized finance is not simply a matter of where to find liquidity; it concerns users, their wallets, and the interaction they will sustain over time in a given platform or app. Two platforms that show strong signals on this front are Blend and Phoenix.

Blend infuses experimental energy into the DeFi universe wowed by Stellar. Similar to a mad scientist in a lab, with a dash of DeFi’s unconventional nature, everything blends, or rather mixes, together. The ingredients are on-chain indicators that matter to users. The big one is wallets. Wallet activity is up, and the addressable surge is likely to help DeFi users address major deficiencies in the current address system. The next ingredient in the address surge is NFTs.

Top wallet net flows further illuminate these communities. They demonstrate everything from the amount of liquidity being supplied to the platform to the quantity being yanked out. And in between those two extremes, they’re a pretty good indicator of whether the platform’s user base is made up of true believers who’ve been, like the Blend team, in for the long haul, or short-termers who could be punking out at any moment.

At the other end of the spectrum, Phoenix is on the fast track to heating up. Known for its rapid-fire swaps and fiery pool combos, Phoenix is stacking up almost $900K in 30-day volume. Its weekly swap activity also shows signs of a breakout moment, with pairs like USDC-PHO and XLM-USDC leading the charge. Phoenix’s dynamic market share growth among pools signals a rising competitive landscape and shifting user preferences.

Both platforms tell a critical story for Stellar: DeFi on this network isn’t just a sit-back-and-watch affair. It’s interactive and even more engaging than before, with users finding new ways to earn, swap, and engage. It’s the future, and it’s happening now.

FXDao Brings Debt Markets to Stellar

One of the most intriguing developments in Stellar’s DeFi ecosystem is FXDao. This stable debt protocol isn’t just a copy of MakerDAO or any other pre-existing decentralized autonomous organization (DAO) for that matter. FXDao has a structure that is both similar to the aforementioned systems and also very different from them in a few key respects. It is a system auditing itself in real-time with the assistance of a few Stellar specialists.

FXDao is creating a small but expanding market for overcollateralized loans, with total debt issued exceeding $4.3 million. Users have the option to deposit digital assets and mint stable debt tokens in return. These include USDx, EURx, and GBPx — tokens that collectively offer multi-currency exposure in a decentralized format.

The collateral mix indicates that the protocol is attempting to serve a variety of user needs, with backing that comes from both stable and volatile assets. Although the number of active vaults is growing, it is doing so at a rather slow pace. This suggests that Stellar DeFi is still in a niche, but also indicates that there is potential for significant expansion if the conditions in the broader ecosystem improve.

FXDao is distinguished by its stability and balance. What we see in FXDao is an experimental approach to DeFi, but one that is firmly grounded in the sorts of practices and patterns that make DeFi work—and not crash, as some in the space do.

A Network Poised for Broader DeFi Adoption

Altogether, these data points paint a decisive picture: Stellar’s DeFi ecosystem is no longer just a concept in development. It is an increasingly concrete thing, comprised of a mix of liquidity protocols, user-focused platforms, and a nascent debt market, serving up the very infrastructure of a self-sustaining DeFi economy.

Even if the overall numbers come up a little short compared to what some of the larger networks are doing, in terms of actual, real-life adoption, Stellar is showing up in some intriguing ways. That’s evident in the apparent Lighthouse navigation of DeFi the network is engaging in. Above all, it seems to me that we’re looking at a quiet DeFi breakout in the Stellar ecosystem.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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