How To Use DeFiLlama To Boost Your DeFi Research
SUMMARY
This guide gives readers a complete overview of DeFiLama, one of the main components of the Milk Road On Chain Toolkit. DeFiLlama is a free platform that provides users with in-depth blockchain data and analytics. This guide also shows readers how to utilize DeFiLlama for their own research.
Introduction
We recently announced the Milk Road On Chain Toolkit, the set of tools we use on a regular basis to put everything together over here at Milk Road. And after polling our readers, the demand was highest for a deep dive into DeFiLlama. (Don’t worry, you’ll get the other guides soon too).
DeFilLama has become one of the most robust platforms for crypto information and research. First, they provide refined data on project metrics like TVL, active users, revenue, and much more. They also allow a lot of customization when sorting data and allow you to directly compare protocols and blockchains.
The team is very active and is constantly shipping new features. And in addition to data, DeFiLlama has been building a lot of internal DeFi products for their users. They recently released a DeFi portfolio tracker, DEX aggregator, and browser extension that helps to prevent phishing transactions.
The best part? DeFiLlama is completely free to use.
How To Use DeFiLlama
Here are our six favorite ways to utilize DeFiLlama at Milk Road:
1. Track TVL Growth of Categories & Blockchains
TVL refers to the total amount of funds that are locked in smart contracts within a protocol or blockchain network. And while it is not a perfect metric to gauge performance, it can be paired with other data to help discover trends and projects to explore.
We like to sort this list by 7-day change so we do not have skewed data, but also can catch trends in a timely manner. The list of blockchains can also be sorted by other time periods, TVL, or number of deployed dApps as well.
As of the end of December, we can see that Manta, a layer-2 blockchain, has driven the most TVL growth over the previous week. A quick search online or on X (Twitter) will show you that they recently launched a point system and are rewarding users who bridge to their network with interest on their assets as well.
Crypto users are often driven by incentives and tracking other users’ flows can help you find the same opportunities. In this case, discovering this trend could help you secure an airdrop and/or introduce you to a new network that has potential.
In addition to the blockchain comparison, the left toolbar on the site also allows you to select “Categories”, where you will be shown a list covering all the different sectors of DeFi. This data is also sorted by TVL flows and can help you spot which sectors are getting the most attention.
You can also dive deeper into each category to find and compare protocols. Here’s what you’ll see when you click on the “liquid staking” category:
2. Track DEX Volume Over Time
While comparing TVL flows gives you a sense of what specific networks are getting the most attention, tracking DEX volume provides more insight into the overall interest in the crypto industry at a given period in time (specifically on-chain activity).
Ignoring one-off events such as major news or liquidations, a sustained rise in DEX volume can indicate renewed interest in the market and the entrance of new users to DeFi.
The uptick since July seen above correlates with the rise in token prices we’ve seen over that period. And you can use the slider below the chart to refine the graph to any chosen time period.
Additionally, you can compare individual DEXes that make up that chart and see which protocols are generating the most volume and revenue in real time. As crypto is not always the most efficient market, this information may help you spot undervalued opportunities.
3. Token Unlocks
We talk about token unlocks fairly often in our daily newsletter. The main thing you need to know: they cause volatility.
As a result, we’ve formed a habit of checking this list and making sure we’re aware of when our holdings may face token unlocks.
You can sort the list of tokens by the size of the project or the size of the unlock. Additionally, you can click on any token from the dashboard to dive into a project further.
P.S. We’re not saying panic and sell your tokens if one is coming up, but it is definitely something to keep on your radar.
4. Find New Protocols to Research
If the recent surge of layer-1 and layer-2 blockchains has taught us anything, it’s that the future of crypto is looking increasingly multi-chain. If you find yourself bridging over to a new blockchain, you can use this tool to become familiar with the network’s native dApps.
When you select “Top Protocols” from the left toolbar, you will be presented with this screen:
This tool displays the leading protocol for each category, sorted by blockchain. In addition to what you see in the screenshot, users can scroll through ~25 categories based on their interests.
For example, if we bridged over to Base for the first time and needed to swap our ETH for some tokens native to Base’s chain, we would first check out Aerodrome based on this table.
5. Keep Track of New Funding Deals
Keeping a pulse on VC investing can help show institutional interest in the crypto space. While token prices bounced back strongly in 2023, the image below shows that interest from private placements is far off from the influx we saw in 2021 and 2022.
Additionally, diving into individual funding deals can help you spot projects in the early stages that piqued the interest of investors. You can also view other data such as the amount raised, the funding round, lead investor, and link to their website.
Some of these projects are likely to eventually drop a token, and it could be worth keeping up with the ones you find interesting by following their socials. There may be an opportunity to earn an airdrop or participate in a token sale down the road if you believe in the project.
6. Find Tokenless Protocols for Potential Airdrops
Airdrops were a popular topic in 2023 and with the recent launch of many point systems, it seems the trend will be continuing in 2024.
And while there is a lot of valuable information floating around X on airdrops, we found a cool way to find potential airdrops that most people aren’t talking about. Select “Airdrops” on the left toolbar and you will arrive at this list.
There are two ways that we utilize this info:
1. Sort the list by “Total Money Raised”
This allows us to see the protocols that have raised the most money, meaning they will likely launch tokens at the highest valuations. If these protocols reserve a significant part of their token’s supply for the community, it could make for a lucrative airdrop.
Note: paying attention to the TVL is also important, as you can see how diluted a certain protocol is becoming. For reference, Jito was a successful airdrop for those who received it because there weren’t many eligible users.
2. Sort by 1-month or 7-day change
Similar to TVL growth above, this data can show which tokenless protocols others are using. This can be valuable; users would likely be using these if there is a high chance for an airdrop or if they are receiving a solid yield.
On this list you can see that EigenLayer is listed, which is a protocol that we are currently using with the Milk Road Public Wallet.
Wrapping Up
Now it’s time for you to dive into DeFiLlama yourself!
Milk Road pro tip: always make sure to use official links from the project’s website or Twitter when navigating DeFi.
For now, stay posted to our daily newsletter and Twitter page for more deep dives and guides. We’ll be covering Dune Analytics, Etherscan, and much more in the near future.
