Compound, MakerDAO, and Aave are currently the top 3 DeFi lenders. Collectively, they were able to have a record $25 billion generated from users in the first quarter of 2021. As DeFi goes to gain momentum, more and more people are joining in on the world of decentralized finance for the first time. This could also be attributed to the recent rapid rise in popularity for the cryptocurrency industry and the use of blockchain technology in several key socio-economic institutions and sectors.
Fantastic Q1 2021 For Compound, MakerDAO, And Aave
As aforementioned, Compound, MakerDAO, and Aave had collectively reached a record high of $25 billion in lending deposits in the first quarter of 2021. Compound is similar to most DeFi protocols in the sense that it is a system that operates both accessible and open smart contracts that are built upon Ethereum. It focuses on enabling various borrowers to take out loans as well as allowing lenders to be able to provide the same loans through having their crypto assets locked up in the protocol.
Aave is a decentralized finance lending platform that enables users to lend, borrow, and collect interest on crypto assets without the use of a middleman. This helps potential borrowers to be able to obtain exposure to various cryptocurrencies without actually owning them. Lastly, MakerDAO is a protocol based on Ethereum, which provides the Dai stablecoin.
Also read:Not only had all 3 of these lenders contributed towards the abovementioned $25 billion being generated, but the year’s first quarter had also managed to see a record be set in terms of outstanding loans. Funds worth $10 billion had been successfully redistributed to various users on the same platform. Also, just over 50% of these loans had come from Compound, whereas 17% came from Aave and 30% had come from MakerDAO.
Quarter 2 not looking so good
As compared to Q1, Q2, on the other hand, might not perform as well. This is because even though April has seen the previous month’s prices be surpassed already, the industry itself has been experiencing a bit of a downhill lately. Nearly all digital assets had decreased in price this week before slightly improving again, and as a result, the second quarter for 2021 may not necessarily be as bullish for the lenders.
Just this past week, Aave had experienced a loss of 22%. Compound and MakerDAO, however, had managed to record gains worth 10% and 22%, respectively. Lastly, as all three are, in fact, ‘governance tokens,’ the holders are given some control regarding the platform’s direction. Furthermore, when we take the hefty balances that were put into the three protocols into account, it is easy to assume that the holders are satisfied for now.
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