Stablecoin dominance calculates what percentage of the total crypto market cap is comprised of stablecoins. As dominance rises, stablecoins compose a larger share of the crypto market. A rising stablecoin dominance indicates risk-off sentiment, generally led by investors redeeming fiat stablecoins for dollars or a sell-off in major crypto assets like BTC and ETH.

An analysis of stablecoin supply composition. Stability is, of course, a core tenant of a stablecoin, and investors tend to own the stablecoins they are most confident will maintain its $1 peg. If a given stablecoin’s dominance begins to drop, it could signal a loss of confidence in the peg or backing of the stablecoin.

DEX trading volume can be a leading indicator for a network’s on-chain activity and momentum.

This chart shows the historical dominance of each DEX as a percentage of share across the major DEXs. Protocol revenue generally grows with trading volume, so monitoring DEX market share can provide insight into which dApps are growing profits.

Variable borrow rates on Aave and Compound are calculated as a function of supply and demand where interest rates scale with the utilization of the assets in a given market. Significant changes in the borrow rate for USDC and ETH can signal changes in market sentiment. For example, USDC borrow rates rise as the demand for leverage increases which indicates traders are adding risk. Conversely, rising ETH borrow rates signals more demand to borrow ETH and short crypto. Note that the volatility in ETH borrowing/lending rates in September 2022 is due to traders attempting to profit on the PoW ETH airdrop.

Variable supply rates are paid to depositors for supplying their assets and creating a market. Significant changes in the supply rate for USDC and ETH can signal changes in market sentiment. These yields are generally considered “risk free” as they are not exposed to impermanent loss and smart contract risk is minimal on battle-tested protocols like Aave and Compound. Note that the volatility in ETH borrowing/lending rates in September 2022 is due to traders attempting to profit on the PoW ETH airdrop.

Variable borrow rates on Aave and Compound are calculated as a function of supply and demand where interest rates scale with the utilization of the assets in a given market. Significant changes in the borrow rate for USDC and ETH can signal changes in market sentiment. For example, USDC borrow rates rise as the demand for leverage increases which indicates traders are adding risk. Conversely, rising ETH borrow rates signals more demand to borrow ETH and short crypto. Note that the volatility in ETH borrowing/lending rates in September 2022 is due to traders attempting to profit on the PoW ETH airdrop.

Variable supply rates are paid to depositors for supplying their assets and creating a market. Significant changes in the supply rate for USDC and ETH can signal changes in market sentiment. These yields are generally considered “risk free” as they are not exposed to impermanent loss and smart contract risk is minimal on battle-tested protocols like Aave and Compound. Note that the volatility in ETH borrowing/lending rates in September 2022 is due to traders attempting to profit on the PoW ETH airdrop.

This chart breaks down the total supplied and borrowed amounts in USD of leading lending protocols Aave and Compound. These metrics are a proxy for the demand for leverage on Ethereum, and one can compare the competition for utilization between the two major players.